Metro AG Annual Report 2020

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FY2020 Annual Report · Metro AG

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ANNUAL REPORT
2020/21

Consolidated financial statements of METRO AG

LET’S
DO
THIS!

METRO IN FIGURES

€ million

Key financial figures for continuing operations

Like-for-like sales development

Sales development in local currency

Sales (net)

Adjusted EBITDA

Transformation costs

Earnings contributions from real estate transactions

EBITDA

EBIT

EBT (earnings before taxes)

Profit or loss for the period1

Earnings per share (basic = diluted)

Dividend per ordinary share2

Dividend per preference share2

Cash flow from operating activities

Investments

Net debt

Employees (annual average by headcount)

1 Attributable to METRO shareholders.
2 The dividend per share relates to both continuing and discontinued operations.

€

2019/20

2020/21

Change in %

−3.9

−4.0

25,632

1,158

1,113

257

−32

−146

−0.40

0.70

646

627

3,771

97,639

−0.4

0.0

24,765

1,171

1,166

197

−56

−0.15

0.00

1,237

764

3,466

95,141

–

−3.4

1.1

39.3

–

4.7

−23.5

–

61.8

−100.0

91.5

21.8

−8.1

−2.6

In many areas of society, the pandemic has
acted as a burning glass: strengths have
become just as apparent as the challenges
that we still face. This is true at METRO, too.
The past year has bound us together even
more strongly than before. Our guiding
theme, #newgether, stood for the spirit of
this new togetherness. Now we look ahead
– to a time of new opportunities and
solutions, full of confidence and the thrill of
anticipation. It’s time to tackle the job at
hand. Let’s do this!

137

CONSOLIDATED FINANCIAL
STATEMENTS AND NOTES

138

139

140

142

144

146

Income statement

Reconciliation from profit or loss for the
period to total comprehensive income

Balance sheet

Statement of changes in equity

Cash flow statement

Notes

278

RESPONSIBILITY STATEMENT
OF THE LEGAL
REPRESENTATIVES

279

INDEPENDENT AUDITOR’S
REPORT

289

SERVICE

TO OUR SHAREHOLDERS

Letter to the shareholders

The Management Board

Report of the Supervisory Board

Report of the Audit Committee

METRO share

GOALS AND STRATEGY

COMBINED MANAGEMENT
REPORT

105

124

131

1 Overview of financial year 2020/21

and outlook

2 Principles of the group

3 Economic report

4 Report on events after the closing date and

outlook

5 Opportunities and risk report

6 Remuneration report

7 Takeover-related disclosures

8 Supplementary notes for METRO AG

(pursuant to the German Commercial Code)

In accordance with our view on integration and inclusion, we advocate a gender-sensitive understanding of
language. For the sole purpose of better readability, we in some cases do not use gender-neutral terms or overtly
inclusive multi-gender descriptions. When we use the generic masculine form in our corporate media and our
social media channels, this is done solely for reasons of the comprehensibility and readability of the text. In all
cases, this form includes all genders equally.

LETTER TO THE
SHAREHOLDERS

THE MANAGEMENT BOARD

REPORT OF THE
SUPERVISORY BOARD

REPORT OF THE AUDIT
COMMITTEE

METRO SHARE

T O O U R
S H A R E H O L D E R S

L E T T E R T O T H E S H A R E H O L D E R S

LETTER TO THE SHAREHOLDERS

The past financial year was unusual and challenging in many ways. After our successful portfolio

transformation during the previous years back to being a pure wholesaler, we focused in

financial year 2020/21 on strengthening the operational wholesale business. The Covid-19

pandemic presented our customers and us with challenges, but also provided us with new

opportunities. We used the time wisely to refine our wholesale profile and streamline our

business to be even more aligned with the needs of our customers. We are focusing on

expanding the multichannel approach with the synergistic combination of wholesale and

delivery. We are also continuing to develop digital tools to support hospitality customers. In

collaboration with our customers, we have done everything we can to emerge from the

pandemic stronger. I am convinced that we have succeeded in this effort. It will serve as the

foundation for our growth course in the coming years. The strategy for this is currently being

developed with energy and commitment at METRO and will be presented at the Capital Markets

Day on 26 January 2022.

Investing in future growth during the pandemic

In addition to taking protective measures for our employees and customers in the beginning of

the Covid-19 pandemic, we immediately took appropriate steps to support our customers in an

environment burdened by significant restrictions and, as much as possible, to operate our

business without constraints. Our multichannel approach was a clear advantage in this regard.

The flexibility of our wholesale stores (for example, no minimum order quantity, no lead time on

orders) became increasingly important to customers during the lockdowns. The store-based part

of our business moved more and more into the centre of attention. METRO’s motivated teams

quickly adapted to the new circumstances. Ensuring the highest possible product availability

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was one of the top priorities. The delivery business, with traditionally larger order volumes, was

able to recover quickly after significant temporary losses.

Investments in digitalisation, the multichannel approach and proximity to customers resulted

in increased trust and customer retention. We have refined and expanded the combination of

our store-based business and Food Service Distribution (FSD). We now deliver out-of-store from

563 stores and 67 dedicated depots. In financial year 2020/21, we expanded out-of-store

delivery by 10 stores and opened a new depot in Rome. We expanded our store network by 3

stores to 681. Rest assured that we will continue to grow and expand our network in the coming

years.

With 4 acquisitions in the hospitality sector since calendar year 2020 (Filpromer in France,

Aviludo in Portugal, Davigel in Spain and C & C Abholgroßmärkte [AGM] in Austria [under

competition law review]), we increased the range of services we offer to our customers and

further extended our reach – in both our store-based and delivery business. As a result of these

transactions, we are offering real added value in products and services and further

strengthening our wholesale position in Western Europe. At the same time, we decided to exit

the operational business in Japan and Myanmar due to a lack of growth prospects.

We have also invested more in the expansion and excellence of our sales force. The team now

consists of 6,385 employees (2019/20: 6,251) and will continue to grow. We have intensified our

contact with our customers and kept it active even during the toughest lockdown periods. The

entire sales force was available to offer advice and support to restaurateurs and Traders, from

setting up ordering websites to advising on formal applications for government support.

All the hard work was rewarded by our customers in financial year 2020/21:

More new customers: around 250,000 new HoReCa customers (gross) added

Very good sales recovery across all channels in the second half of the year: positive growth

in wholesale stores (+4.7%) and the delivery business (+47%); with a sales share of 19%, the

delivery business was already back to pre-pandemic levels

Hospitality Digital on track for success: 15,000 new customers use digital solutions

Several all-time sales records in individual months:

France, Germany, Netherlands and Russia achieved the highest FSD sales ever

Poland and Croatia achieved the highest HoReCa sales ever

Turkey and Ukraine recorded the highest number of buying customers in the FSD business

Further franchise expansion: METRO Slovakia opened its 673rd franchise store, METRO

Romania surpassed 1,609 franchise stores

Strong development above HoReCa market level: outperformance in important HoReCa

markets in Germany, Spain, Italy and France as well as in Russia

Strong business development especially in the second half of the financial year

Thanks to intensified customer relationships and investments in the expansion and digitalisation

of the business model, the group enjoyed an above-average benefit from the recovery of the

hospitality industry upon the easing of government restrictions. In financial year 2020/21, we

achieved the following targets:

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Sales and EBITDA at the upper end of the outlook range

Sales development in local currency at previous year’s level (0.0%) or −0.4% adjusted for
initial consolidations1. Like-for-like sales decreased slightly by −0.4%. (Outlook: −0.5% to
−3.5%)

Adjusted EBITDA reached €1,171 million (2019/20: €1,158 million). Adjusted for currency

effects (outlook view), EBITDA adjusted increased by €65 million excluding Aviludo and

Davigel Spain compared to the same period last year (Outlook: €+50 million to

€−75 million compared to the previous year)

Multichannel focus proved successful: strong recovery in Western Europe, combination of

sales channels with wholesale stores, delivery business and digitalisation

Earnings per share: reported earnings per share (EPS) are €−0.15 (2019/20: €−0.40)

In line with METRO’s dividend policy (payout ratio of 45% to 55% of EPS), there are no planned

dividend distributions in financial year 2020/21 for ordinary shares or preference shares. Last

year, the Management Board and the Supervisory Board had proposed a dividend of €0.70 to

the Annual General Meeting despite a negative EPS in continuing operations, since the reported

EPS including discontinued operations actually amounted to €1.27 due to the positive

transaction proceeds (sale of majority stake in METRO China and the Real hypermarket

business). Since no significant transaction proceeds were received this year and the ongoing

Covid-19 pandemic continues to cause uncertainties, the Management Board and the

Supervisory Board consider this proposal to be appropriate.

Carbon neutrality as an important corporate goal

We are food experts with more than 55 years of experience. Climate change and its

consequences pose risks for all companies – but especially for those whose business model is

based on natural resources. As an international wholesaler with millions of customers in the

hospitality industry and retail sectors, we have a great deal of leverage to initiate sustainable

change – not only for ourselves, but also for our customers and partners. We can contribute to a

more sustainable value chain with a resource-friendly business operations and more efficient

processes. To lead by example, we tightened our existing climate target in July 2021 and now

aim to become carbon neutral by 2040 in our global business operations mainly through own

initiatives (with the exception of logistics, which will be managed in a separate target). To

achieve this goal, we will invest around €1.5 billion in technology and innovation.

1 Outlook view: constant portfolio, adjusted for initial consolidation of the Aviludo Group and Davigel Spain.

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Outlook

L E T T E R T O T H E S H A R E H O L D E R S

The Management Board expects a total sales growth of 3% to 7% (2020/21: 0.0% with Japan and

Myanmar, 0.1% without Japan and Myanmar) for financial year 2021/22, hence reaching the pre-
pandemic level2. The HoReCa business is expected to be the main growth driver, especially due
to high momentum in delivery. All segments will contribute to the growth. For Western Europe

(excl. Germany), a significantly overproportionate growth is expected. Germany is expected to

grow below the group range, also due to the reduction of the tobacco business.

The Management Board further expects an EBITDA adjusted on the level of the past financial

year 2020/21 (€1,187 million without Japan and Myanmar). For Western Europe (excl. Germany),

a significant growth is expected. The segment Others was supported by one-time effects in the

mid double-digit million euro range in financial year 2020/21. Due to this and further

digitalisation efforts, it will therefore be noticeably below the level of the previous year.

The outlook is based on the assumption of stable exchange rates and no further adjustments

to the portfolio.

Time for growth – let’s do this

Dear shareholders, I would like to take this opportunity to thank you very much for your

continued trust and support, even in challenging times. Our employees supported our customers

with tremendous energy, effort and dedication in this unique situation. Therefore, my particular

gratitude and appreciation go out to the strong METRO team. In my first 8 months as CEO I have

visited almost all METRO countries to get an up-close, detailed picture of the operational

business and talked to many employees and customers. METRO continues to develop and drive

its strategy forward with great energy. After long years of portfolio transformation and

restrictions due to the pandemic, we have returned to our roots: wholesale. Now is the time for

growth. Join us on an exciting and promising journey: Let’s do this.

Yours truly,

Dr Steffen Greubel

Chairman of the Management Board of METRO AG

2 On a comparable, operational level

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T H E M A N A G E M E N T B O A R D

THE MANAGEMENT BOARD

DR STEFFEN
GREUBEL

CHRISTIAN
BAIER

Chairman of the
Management Board

Areas of responsibility
Corporate Communications, Corporate
Office, Corporate Public Policy, Global
Branding & Activation, Global Digital
Business Lead, M&A | Legal & Compliance,
Strategy | Investor Relations, Hospitality
Digital, METRO MARKETS.

Profile
Dr Steffen Greubel has been Chairman of the
Management Board of METRO AG since
1 May 2021 and has been appointed to that
position until 30 April 2024. He was
previously employed by the Würth Group
from April 2014, initially as Executive Vice
President and from 2019 as part of group
management. Prior to that, Dr Steffen
Greubel worked for the business consulting
firm McKinsey & Company. The trained
banker graduated from Witten/Herdecke
University in 2000 and received his
doctorate from the University of Magdeburg
in 2006.

Chief financial officer

Areas of responsibility
Corporate Accounting & Controlling,
Corporate Risk Management, Corporate Tax,
Corporate Treasury, Global Business Services,
Group Internal Audit, METRO DIGITAL,
METRO Insurance Broker, MIAG, METRO
LOGISTICS, METRO PROPERTIES.

Profile
Christian Baier was appointed member of the
Management Board of METRO AG on
11 November 2016. His current appointment
as a member of the Management Board runs
until 30 September 2025. Together with
Rafael Gasset, he was (interim) Co-Chairman
from 1 January to 30 April 2021. He was the
Chief Financial Officer (CFO) of
METRO Cash & Carry from 1 July 2015 to
1 March 2017 and previously held the position
of Group Director Strategy, Business
Innovation and M&A at the former
METRO AG (now: CECONOMY AG). Christian
Baier joined METRO Cash & Carry Germany
(now METRO Germany) as a member of the
Management Board/Head of Finance and
Administration – C+C Schaper – in 2011. After
graduating with an MBA degree from New
York University, he worked at the financial
investment firm Permira and at various
banks.

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ANDREA
EUENHEIM

RAFAEL
GASSET

ERIC
POIRIER

Chief Human Resources
Officer and Labour
Director

Areas of responsibility
Corporate Responsibility, International HR
Business Partner, Global HR
Communications, Global HR Transformation
and Compensation & Benefits, Global
Diversity & Inclusion, Global Employer
Branding, Talent Acquisition & Onboarding,
Global HR Operations & Services, Global
Talent Management, HR for Technology,
METRO Campus Services.

Profile
Andrea Euenheim was appointed member of
the Management Board and Labour Director
of METRO AG on 1 November 2019 for a term
ending on 31 October 2022. Prior to that, she
worked at Amazon in Seattle, USA, from
October 2015, initially as HR Director of
Global Consumer Products and since the end
of 2017 as HR Director of Global Expansion,
Mergers and Acquisitions (M&A). Before
moving to the US, Andrea Euenheim was
responsible for HR management at Amazon
Europe since 2007, primarily overseeing
Germany, Italy, Spain and France. From 2001
to 2007, she worked for General Electric,
where her last position was Head of Human
Resources for Germany, Austria and
Switzerland at GE Commercial Finance, Fleet
Services. Andrea Euenheim completed her
master’s degree in linguistics, sociology,
psychology and business administration at
the University of Passau.

Chief Operating Officer
(Convenience Cluster)

Chief Operating Officer
(Hospitality Cluster)

Areas of responsibility
Customer Experience, Food Service
Distribution, Sales Force, SME Services, Store
Excellence & Pricing, METRO ADVERTISING,
METRO Financial Services.

METRO national subsidiary and
organisational responsibilities: Austria,
Belgium, Classic Fine Foods, Czech Republic,
Germany (incl. Rungis Express), France (incl.
Pro à Pro), Italy, Netherlands, Portugal (incl.
Aviludo), Slovakia and Spain (incl. Davigel).

Profile
Eric Poirier was appointed member of the
Management Board of METRO AG on 1 April
2020 for a term ending on 31 March 2023.
From 1 July 2018 to 31 March 2020, he held
the position of Operating Partner with
responsibility for subsidiaries in France
including Pro à Pro, Italy, Spain and Portugal.
Previously, he was the Chief Executive
Officer at MAKRO Poland and held various
positions at METRO national subsidiaries.

Areas of responsibility
Global Procurement (Business
Transformation, Global Business & Supplier
Management, Global Non-Food & Food
Sourcing incl. Own Brand Management,
Global Quality Assurance Management,
Master Data, Offer Methods and Processes,
Supply Chain Management), NX-Food, Retail
Franchise, Trader Digital, METRO SOURCING
International.

METRO national subsidiary responsibilities:
Bulgaria, China, Croatia, Hungary, India,
Japan3, Kazakhstan, Moldova, Myanmar4,
Pakistan, Poland, Romania, Russia, Serbia,
Turkey, Ukraine and Hungary.

Profile
Rafael Gasset was appointed member of the
Management Board of METRO AG on 1 April
2020 for a term ending on 31 March 2023.
Together with Christian Baier, he was
(interim) Co-Chairman from 1 January to
30 April 2021. From 22 June 2015 to 31 March
2020, he was Operating Partner with various
national subsidiary responsibilities, since
2018 for Russia, Romania, Moldova and
Poland. Before becoming Operating Partner,
he was the Regional Operating Officer at
METRO Cash & Carry overseeing the Eastern
Europe region. Rafael Gasset previously held
various positions at METRO national
subsidiaries.

3 METRO Japan and METRO Myanmar: Country exit at the beginning of financial year 2021/22
4 METRO Japan and METRO Myanmar: Country exit at the beginning of financial year 2021/22

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REPORT OF THE SUPERVISORY BOARD

Following the transformation into a pure wholesaler, a new phase of the company began for

METRO in financial year 2020/21. This turning point also brought a change in METRO’s

management. Effective 1 May 2021, Dr Steffen Greubel succeeded Olaf Koch, who left our

company after 9 years as CEO and was given a farewell with great thanks for his work. In Dr

Steffen Greubel, the Supervisory Board believes it has found the right person to streamline the

development of METRO with a focus on growth.

Financial year 2020/21 was again dominated by the Covid-19 pandemic. Our HoReCa customers in

particular once again had to cope with considerable cutbacks, including the complete closure of their

business. METRO actively supported them in this very difficult phase. For the company, too, the

pandemic again had a significant impact on results. The fact that METRO was nevertheless able to

achieve satisfactory results overall was only possible thanks to the enormous contribution of our

employees, who worked under pandemic-related restrictions in our stores and all other areas of our

company. As the Supervisory Board, we would like to express our special thanks to the entire team

and the Management Board for their unwavering commitment.

Jürgen Steinemann
Chairman of the Supervisory Board

Profile
Jürgen Steinemann was born in 1958 in Damme,
Germany. He graduated with a degree in business
administration from the European Business School in
Wiesbaden, London and Paris in 1985 and initially held
different management positions at Eridania Béghin-Say,
Unilever and Nutreco. Jürgen Steinemann was CEO of
Barry Callebaut AG from 2009 to 2015. He is currently
the CEO of JBS Holding GmbH. From 2015 to the
demerger of the former METRO GROUP in July 2017,
Jürgen Steinemann was a member of the Supervisory
Board of the former METRO AG (now: CECONOMY AG)
and Chairman of the Supervisory Board since February
2016. Jürgen Steinemann has been Chairman of the
Supervisory Board of the current METRO AG since 2017.

More information about the other members of the
Supervisory Board can be found on the website
www.metroag.de/en in the section Company –
Supervisory Board.

It is our hope that we can now all soon return to a near-normality situation, and that we can also

all return to our workplaces to support METRO with all our strength in its growth ambition.

Besides the right strategy, this requires more customer focus throughout the company and

better, faster and simpler implementation of ideas, and thus more entrepreneurial daring overall.

I look forward to tackling these issues with your support in the future.

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Advice and supervision in consultation with the Management Board

In financial year 2020/21, the Supervisory Board performed the duties imposed on it by law, the

Articles of Association and the Code of Procedure. We advised the Management Board in

relation to the management of METRO AG and the Group and supervised its activities. The

Management Board furnished us with detailed written and verbal information on all significant

matters within METRO at the Supervisory Board meetings and on other occasions in a timely

manner and in accordance with the statutory requirements. Its reporting in particular included

information on current business developments on the intended business policies and other

fundamental concerns relating to corporate planning as well as information about the situation

of the company and the Group (including the risk position, risk management and compliance).

The Management Board provided explanations for any deviations from planned business

performance. We have given our approval for individual business transactions, if it was required

by law, the Articles of Association or internal regulations. Since no matters requiring clarification

arose, we did not make use of the Supervisory Board’s rights of inspection and audit pursuant to

§ 111 Section 2 Sentences 1 and 2 of the German Stock Corporation Act (AktG). Managers from

the relevant departments of METRO attended meetings to address particular agenda items.

As the Chairman of the Supervisory Board, I also worked closely with the Chief Executive

Officer and the Chief Financial Officer outside of meetings and regularly exchanged information

and ideas with regard to key issues and pending decisions. During the interim period between

the departure of Olaf Koch and the arrival of Dr Steffen Greubel, I also had frequent discussions

with Christian Baier and Rafael Gasset in their function as Co-CEOs. I was also in contact with

the members of the Supervisory Board outside of meetings. In our capacity as committee

chairmen, Prof. Dr Edgar Ernst and I also reported on the work and recommendations of the

respective committees at the subsequent Supervisory Board meeting.

The Supervisory Board held a total of 9 meetings in financial year 2020/21, with 2 meetings

convened as extraordinary meetings. The average attendance rate at meetings of the

Supervisory Board and its committees in financial year 2020/21 was 92%. An individualised

overview of the participation of each member of the Supervisory Board in office in financial year

2020/21 in the meetings of the Supervisory Board and its committees is contained in the section

‘Individual attendance at meetings’ of this report. Moreover, 2 resolutions were passed in a

written procedure outside a Supervisory Board meeting. In so-called closed sessions, the

members of the Supervisory Board regularly exchanged views without the participation of the

members of the Management Board. As was customary in the past, both the shareholder and

employee representatives on the Supervisory Board of METRO AG discussed relevant agenda

items in separate pre-meetings.

Changes in the composition of the Supervisory Board and the Management
Board

At the end of the Annual General Meeting of METRO AG on 19 February 2021, the terms of office

for Herbert Bolliger, Peter Küpfer and myself officially ended. By election of the Annual General

Meeting, I entered a new term of office on the same day. Subsequent to the Annual General

Meeting, the members of the Supervisory Board of METRO AG re-elected me as Chairman of the

Board. Roman Šilha and Stefan Tieben succeeded Herbert Bolliger and Peter Küpfer as new

members of the Supervisory Board by appointment by the Annual General Meeting.

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Olaf Koch left the Management Board of METRO AG with effect from 31 December 2020.

After an interim phase managed by the Co-CEOs, Dr. Steffen Greubel succeeded Olaf Koch as

CEO on 1 May 2021.

Key issues covered by Supervisory Board meetings

October 2020 – In an extraordinary meeting, the Supervisory Board passed a resolution on the

submission and publication of a joint reasoned statement by the Management Board and the

Supervisory Board pursuant to § 27 of the German Securities Acquisition and Takeover Act

(WpÜG) on the voluntary public takeover offer of EP Global Commerce GmbH dated 1 October

2020. After a thorough review, the Supervisory Board and the Management Board jointly

recommended to the METRO shareholders not to accept the takeover offer of EP Global

Commerce, as both boards were of the opinion that the proposed consideration significantly

undervalues METRO AG.

November 2020 – At the November meeting, the members of the Supervisory Board first

received an update on the takeover process. The Management Board presented information on

the current business development and provided updates on the status of the 2 major

transformation and efficiency programmes at METRO LOGISTICS Germany GmbH and METRO-

NOM GmbH/METRO DIGITAL GmbH. It was followed by information from Andrea Euenheim

about changes in top management and her report on the human resources strategy, in which she

presented the development and promotion concepts at METRO, among other things.

Furthermore, information on the sustainability initiatives at METRO was provided. The

Supervisory Board also dealt with Management Board remuneration and passed a resolution on

the individual performance factors of the Short-Term Incentive (STI) 2019/20 and on the amount

of the variable remuneration components to be granted for financial year 2019/20. Another

resolution was passed on the declaration on corporate management 2019/20. The Supervisory

Board also dealt with the governance functions in the group (internal control systems, risk

management system, internal audit and compliance). Finally, we dealt with the status of the

search for a successor to Olaf Koch and discussed possible interim solutions until the

appointment of a new CEO. Subsequent to the meeting, by way of a resolution adopted outside

of a meeting, we appointed board members Christian Baier and Rafael Gasset jointly as Co-

Chairmen of the Management Board for the period from 1 January 2021 until the appointment of

a successor to Olaf Koch in the CEO position takes effect.

December 2020 – The focus of the balance sheet meeting was on the review of the annual

financial statements, the consolidated financial statements and the combined management

report for 2019/20. Those documents included the reporting on the non-financial statement for

METRO AG and the group, the associated audit reports and the proposal for the appropriation

of profits. Moreover, it involved a resolution on the approving acknowledgement or approval of

the annual financial statement documents and audit reports and the proposal for the

appropriation of profits. The Supervisory Board also dealt with personnel matters of the

Management Board, focusing in particular on the CEO search, and adopted the Management

Board’s schedule of responsibilities with effect from 1 January 2021. Other topics included

updates on the transformation programmes and information on a project, which aims to partially

renew and standardise the financial reporting system. It was followed by resolutions on the

report of Supervisory Board 2019/20 and on the proposed resolutions for the Annual General

Meeting of METRO AG on 19 February 2021.

February 2021 – In an extraordinary meeting, the Supervisory Board appointed Dr Steffen

Greubel as a member of the Management Board and as Chairman of the Management Board of

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METRO AG with effect from 1 May 2021 for a period of 3 years. The Supervisory Board also

approved the conclusion of his employment contract. In our ordinary February meeting, we

passed resolutions on early and long-term lease extensions for 6 store locations operated by

METRO Germany. In addition, we approved investments for the implementation of technical

standards and the conclusion of a service contract with an implementation partner.

Subject to the election of the auditor by the Annual General Meeting 2021, we resolved on the

audit assignments for the annual and consolidated financial statements for 2020/21 as well as

the audit review of the condensed financial statements and interim management report of the

first half of financial year 2020/21. Furthermore, as a precautionary measure, we passed a

resolution to authorise a law firm, in particular with regard to potential actions for rescission or

nullity against resolutions of the 2021 Annual General Meeting.

The terms of office of Herbert Bolliger, Peter Küpfer and myself ended with the conclusion of

the virtually conducted Annual General Meeting 2021. At the Annual General Meeting, I was re-

elected and Roman Šilha and Stefan Tieben were appointed new members of the Supervisory

Board. After the Annual General Meeting 2021, the members of the Supervisory Board – in this

composition – re-elected me as their Chairman in a written procedure and decided on changes

in the composition of the committees.

May 2021 – Besides reporting on the current business development, we discussed an

overview of the development of the Food Service Distribution (FSD) business and with the

global management of the FSD activities. We received information on the planned development

of the METRO Campus in Düsseldorf. The development at the Campus is potentially not

intended as a purely residential location, but rather as a lively neighbourhood development, for

which an urban planning competition is being conducted in close coordination with the City of

Düsseldorf. We passed a resolution on adapting the schedule of responsibilities for the

Management Board as of May 2021. Furthermore, we made decisions on remuneration-related

topics for the members of the Management Board, including an adjustment of the financial

performance targets for the STI 2020/21. This was done in light of the fact that the sales and

earnings development was significantly more impaired by the restrictions caused by the

Covid-19 pandemic than initially assumed in the budget planning. As a result of this adjustment,

we also decided to update the declaration of conformity of the Management Board and the

Supervisory Board with the recommendations of the German Corporate Governance Code in

accordance with § 161 of the German Stock Corporation Act (AktG). Next we received an update

on the topic of leadership at METRO, which also included succession planning for the respective

executive responsibilities.

June 2021 – The strategy process was first initiated by a survey addressed to the members of

the Supervisory Board, which allowed us to assess the priorities of the issues important to us.

Based on this, the strategy meeting was prepared through workshops of the shareholder and

employee benches. In the meeting on 29 June 2021, the Management Board and the Supervisory

Board then focused their discussion on the basic strategic direction. They also consulted on key

topics of strategic development and identified important growth levers for METRO.

July 2021 – As part of reporting on the current business development, we received an update

on the strategy process, focusing on the next steps to validate the growth levers, reinforce them

with initiatives, and develop a roll-out programme. We made decisions on lease agreement

extensions of 43 store locations in France and approved the acquisition of an Austrian wholesale

company. The agreement concluded by METRO in this context at the beginning of September

included, inter alia subject to merger control clearance in Austria, the acquisition of C&C

Abholgroßmärkte GmbH (AGM) with 9 selected AGM stores and, in some cases, associated

properties, the AGM head office as well as the associated employees. This transaction shall

enforce the competence and positioning of METRO Austria in the hospitality wholesale sector.

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Furthermore, the Management Board informed us about the consideration of a possible market

exit in Japan. As a result, we approved the disposal of the Japanese properties linked to a

potential discontinuation of METRO Cash & Carry Japan K.K.’s business activities, thus paving

the way for the Management Board to conduct a fundamental analysis of alternative options.

Subsequently, the Management Board resolved, that as a result of the ongoing review of the

national subsidiary portfolio, it intends to start the market exit process in Japan and terminate

business operations in Japan with all 10 stores and the delivery business by the end of October

2021. The meeting was followed by a regulatory briefing with particular focus on the implications

of the Financial Market Integrity Strengthening Act (FISG) on auditing and corporate

governance. Building on this information, we decided as part of a principle decision that

participation of members of the Management Board of METRO AG within the setting of the

Supervisory Board meetings is also required for agenda items for which the auditor is called in

as an expert. Following the meeting, there was an opportunity for the Supervisory Board

members to participate in an internal training programme featuring a presentation by the CEO

of MAKRO Poland, Dominik Branny, on insights into the country, the current business and the

potential for the future.

September 2021 – The focus of this meeting was to continue the work on the strategy

process as well as the approval of the budget planning for 2021/22 and subsequent years. We

received information on the METRO own-brand portfolio. Andrea Euenheim provided

information on HR initiatives. We passed resolutions on Management Board remuneration

matters. We reviewed the company’s corporate governance by adopting resolutions on the

confirmation or adjustment of the diversity concept for the Management Board and the

Supervisory Board and on the declaration of conformity in accordance with § 161 of the German

Stock Corporation Act (AktG). We also approved a potential full or partial disposal of the

minority stake in METRO China held by METRO and had the possible options explained to us.

Based on the recommendation of the Audit Committee, we awarded another contract to

auditing firm KPMG, which included the audit of the dependent company report 2020/21.

Moreover, we were informed about tax aspects relating to Supervisory Board remuneration.

Work in the committees

For the purpose of effectively performing its duties, the Supervisory Board has 4 permanent

committees: the Presidential Committee, the Audit Committee, the Nomination Committee and

the Mediation Committee pursuant to § 27 Section 3 of the German Co-determination Act

(MitbestG). The committees prepare the consultations and resolutions in the Supervisory Board

meetings. In addition, also decision-making responsibilities were transferred to the committees

within the legally allowed parameters. The respective chairmen of the committees report to the

Supervisory Board regularly and comprehensively with regard to the work in the committees.

Guests such as managers from the responsible departments of METRO or the auditors were

invited to the committee meetings to discuss specific topics.

Presidential Committee – The Presidential Committee is mainly concerned with the personnel

and remuneration issues of the members of the Management Board and monitors compliance

with legal regulations and the application of the German Corporate Governance Code. In

addition, the Presidential Committee is responsible for urgent resolutions and issues that the

Supervisory Board has delegated to it for resolution. The Presidential Committee held 5

meetings in financial year 2020/21; 2 meetings were convened as an extraordinary meeting. In

February 2021, the Presidential Committee was expanded and since then has consisted of the

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following 6 members (as of 30 September 2021): Jürgen Steinemann (Chairman), Xaver Schiller

(Vice Chairman), Thomas Dommel, Prof. Dr Edgar Ernst, Roman Šilha, Manuela Wetzko.

The subjects of discussion and resolutions of the Presidential Committee in financial year

2020/21 were issues relating to the remuneration and contractual matters of the members of the

Management Board. In addition, the Presidential Committee dealt with the search for a

successor to the position of Chairman of the Management Board, which was ultimately finalised

with the resolution to appoint Dr Steffen Greubel. Further issues addressed by the Presidential

Committee included corporate governance at METRO, especially the preparation of the

declaration of conformity in accordance with § 161 of the German Stock Corporation Act (AktG).

As regular topics of discussion in the committee, long-term succession planning and the

continuous development of talent management were discussed.

Audit Committee – The Audit Committee is in particular responsible for supervising the

company’s accounting, accounting processes, the effectiveness and development of the internal

control systems, the risk management system, the internal audit system, the audit of the annual

financial statements (in particular relating to the selection and independence of the auditor, the

quality of the audit and any additional services provided by the auditor) as well as compliance.

Details of the Audit Committee’s deliberations and resolutions can be found in the separate

Report of the Audit Committee

page 20 .

The Audit Committee consists of the following members (as of 30 September 2021): Prof. Dr

Edgar Ernst (Chairman), Xaver Schiller (Vice Chairman), Marco Arcelli, Stefanie Blaser, Michael

Heider and Dr Fredy Raas.

Nomination Committee – The Nomination Committee prepares for the election of

shareholder representatives to the Supervisory Board and proposes suitable candidates to the

Supervisory Board for recommendation to the Annual General Meeting. In financial year 2020/21,

a total of 3 committee meetings were held, with 1 meeting convened as an extraordinary

meeting, for the purpose of preparing election proposals to the Annual General Meeting for 2021

and 2022. The following members are part of the Nomination Committee (as of 30 September

2021): Jürgen Steinemann (Chairman), Gwyn Burr, Roman Šilha.

Mediation Committee – In financial year 2020/21, the Mediation Committee established in

accordance with § 27 Section 3 of the German Co-determination Act (MitbestG) did not have to

be convened. The Mediation Committee consists of the following members (as of 30 September

2021): Jürgen Steinemann (Chairman), Xaver Schiller (Vice Chairman), Thomas Dommel, Prof. Dr

Edgar Ernst.

Takeover Committee – In connection with the voluntary takeover offer by EP Global

Commerce GmbH, which was announced on 13 September 2020 and published on 1 October

2020, the Supervisory Board also established a Takeover Committee with equal representation.

The task of the Takeover Committee was to continuously deal with the takeover process and

prepare all requisite or expedient tasks and decisions of the Supervisory Board. During the

reporting period, the Takeover Committee convened 4 times, primarily to prepare the review of

the voluntary takeover offer and the reasoned statement pursuant to § 27 of the German

Securities Acquisition and Takeover Act (WpÜG). The members of the Takeover Committee were

Jürgen Steinemann (Chairman), Stefanie Blaser, Prof. Dr Edgar Ernst, Michael Heider, Xaver

Schiller and Alexandra Soto.

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Individual attendance at meetings

In light of the Covid-19 pandemic, the option of participating via telephone or video conference

in Supervisory Board and committee meetings was used more often. However, as the

Supervisory Board, we see great added value in face-to-face communication, especially since it

stimulates discussion. Therefore, as soon as the public constraints to contain the pandemic

allowed it again, we initially held hybrid meetings, followed by in-person meetings in July and

September 2021. Attendance of members of the Supervisory Board in office in financial year

2020/21 at meetings is disclosed in the following. Only those meetings that took place during

the respective membership of the Supervisory Board or committee are listed.

Supervisory Board

Jürgen Steinemann (Chairman)

Xaver Schiller (Vice Chairman)

Marco Arcelli

Stefanie Blaser

Herbert Bolliger, until 19/2/2021

Gwyn Burr

Thomas Dommel

Prof. Dr Edgar Ernst

Michael Heider

Udo Höfer

Peter Küpfer, until 19/2/2021

Rosalinde Lax

Dr Fredy Raas

Roman Šilha, since 19/2/2021

Eva-Lotta Sjöstedt

Dr Liliana Solomon

Alexandra Soto

Stefan Tieben, since 19/2/2021

Manuela Wetzko

Angelika Will

Manfred Wirsch

Silke Zimmer

Attendance rate (total)

Supervisory
Board

Presidential
Committee

Audit
Committee

Nomination
Committee

Takeover
Committee

Total (in %)

9/9

8/9

9/9

5/5

9/9

7/9

9/9

–

9/9

4/4

7/9

9/9

4/4

9/9

6/9

9/9

5/5

–

5/5

–

2/2

–

2/2

–

6/6 (Guest)

3/3

6/6

–

6/6

–

5/6

–

3/3

–

1/1

–

3/4

4/4

–

4/4

–

4/4

–

100

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Corporate governance

The Management Board and the Supervisory Board of METRO AG attach high priority to the

principles of good corporate governance. Against this background, the Management Board and

the Supervisory Board base their actions on the recommendations of the German Corporate

Governance Code and, in September 2021, issued their annual declaration of conformity with

regard to the recommendations of the Government Commission on the German Corporate

Governance Code pursuant to § 161 of the German Stock Corporation Act (AktG) and published

the declaration of conformity on the website www.metroag.de/en in the section Company –

Corporate Governance. Reporting on METRO’s corporate governance can be reviewed in the

declaration on corporate management. This document has also been published on the website

www.metroag.de/en in the section Company – Corporate Governance. During the reporting

period, the 2019/20 declaration of conformity was also updated in May 2021.

Due to the ongoing Covid-19 pandemic, the training and development programme for the

members of the Supervisory Board had to be significantly reduced. New members of the

Supervisory Board had the option to be comprehensively introduced to the company’s business

activities as part of a virtual onboarding programme.

The members of the Supervisory Board are required to disclose any conflicts of interest

without delay. Member of the Supervisory Board Marco Arcelli did not participate in the

deliberations in October and November 2020 or resolutions of the Supervisory Board of

METRO AG in connection with the voluntary takeover offer of EP Global Commerce GmbH

announced on 13 September 2020 and published on 1 October 2020, or in the associated flow of

information. The background here is that Marco Arcelli is simultaneously holding the position as

CEO of EP Global Commerce a.s., the parent company of EP Global Commerce GmbH, and thus

a person acting jointly with the latter as defined in § 2 Section 5 of the German Securities

Acquisition and Takeover Act (WpÜG).

No further conflicts of interest arose in financial year 2020/21.

Annual and consolidated financial statements, report on relationships with
affiliated companies 2020/21

The auditor KPMG AG Wirtschaftsprüfungsgesellschaft has reviewed the annual financial

statements prepared by the Management Board in accordance with the German Commercial

Code (HGB) and the consolidated financial statements prepared by METRO AG based on the

International Financial Reporting Standards (IFRS). It also reviewed the combined management

report for METRO AG and the group for financial year 2020/21 and issued an unqualified audit

certificate. The auditor also issued an unqualified certificate about the combined non-financial

statement contained in the combined management report as a result of his audit to provide

limited assurance. The auditor provided a written report on these audits.

In accordance with § 312 of the German Stock Corporation Act (AktG), the Management

Board of METRO AG has prepared a report on the company’s relationships with affiliated

companies for financial year 2020/21. The auditor has also audited this report, reported the

result of the audit in writing and issued the following opinion:

‘Following our audit and review in accordance with professional standards, we confirm that

1. the factual disclosures in the report are correct,

2. the consideration paid by the company for the legal transactions listed in the report was

not unreasonably high nor have disadvantages been offset,

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3. there are no circumstances that would support a materially different assessment of the

measures listed in the report than that of the Management Board.’

This report, the documents for the financial statements, including the combined non-financial

statement, as well as the audit reports were discussed and reviewed in great detail during the

meeting of the Audit Committee on 13 December 2021 and in the Supervisory Board meeting on

14 December 2021 in the presence of the auditor. The required documents were distributed to all

members of the Audit Committee as well as the Supervisory Board in due time prior to these

meetings. In both meetings, the auditor reported about the key findings of his audits and was at

the Supervisory Board’s disposal to answer questions and provide additional information also in

the absence of the Management Board.

The auditor also provided information on services rendered in addition to auditing services.

No issues resulting in a disqualification due to bias arose.

Based on our own review of the annual financial statements, the consolidated financial

statements and the combined management report, including the combined non-financial

statement, as well as the report of the Management Board on relationships with affiliated

companies for financial year 2020/21, we had no objections and the Supervisory Board approved

the result of the audit. As recommended by the Audit Committee, we approved the annual

financial statements and the consolidated financial statements submitted by the Management

Board. The Annual Financial Statements of METRO AG are thus adopted. As a result, we have

also determined that there are no objections to be raised against the declaration of the

Management Board at the end of the report on relationships with affiliated companies 2020/21.

Following a careful own review and consideration of the interests involved, we approved the

Management Board’s proposal to the Annual General Meeting 2022 for the appropriation of the

balance sheet profit.

Düsseldorf, 14. December 2021

The Supervisory Board

Jürgen Steinemann

Chairman of the Supervisory Board

Information about the members of the Supervisory Board can be found on the website www.metroag.de/en in the
section Company – Supervisory Board.

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REPORT OF THE AUDIT COMMITTEE

The focus on the Audit Committee’s performance of its duties is steadily increasing. To reflect

this increased attention, as Chairman of the Audit Committee of METRO AG, I would like to

review financial year 2020/21, which was again marked by the effects of the Covid-19 pandemic,

from the perspective of the committee and report on the tasks and activities of the corporate

body.

Prof. Dr Edgar Ernst
Chairman of the Audit Committee

Profile
Prof. Dr Edgar Ernst studied mathematics with a minor
in business administration at the University of Cologne
and holds a Master of Operations Research title from
the University of Aachen. After completing his studies,
he was awarded a doctorate in political science (Dr rer.
pol.) from RWTH Aachen (University of Technology in
Aachen, North Rhine-Westphalia) in 1982. Prof. Dr Edgar
Ernst began his professional career in 1983 at McKinsey
& Company, Inc. In 1986, he transferred to
Großversandhaus Quelle GmbH. From 1990 to 1992,
Prof. Dr Ernst was the Head of Planning and Controlling,
and from 1992 to 2007 Chief Financial Officer of
Deutsche Bundespost POSTDIENST (later Deutsche
Post AG). From 2006 to 2008, he was a member of the
Management Board of the WHU Foundation. Since
2006, Prof. Dr Ernst has been an honorary professor at
the WHU – Otto Beisheim School of Management. He
has been President of the German Financial Reporting
Enforcement Panel (FREP) since 2011 and will remain in
that position until the end of 2021. Since 2017, he has
been a member of the Supervisory Board and Chairman
of the Audit Committee of METRO AG.

More information about the other members of the
Supervisory Board can be found on the website
www.metroag.de/en in the section Company –
Supervisory Board.

The Audit Committee is in particular responsible for supervising the company’s accounting,

accounting processes, the effectiveness and development of the internal control systems, the

risk management system, the internal audit system, the audit of the annual financial statements

(in particular relating to the selection and independence of the auditor, the quality of the audit

and any additional services provided by the auditor) as well as compliance. Further information

on the work of the Audit Committee is defined in the Code of Procedure of the Audit

Committee.

The Code of Procedure of the Audit Committee of the Supervisory Board of METRO AG can be found on the website
www.metroag.de/en in the section Company – Corporate Governance.

The Audit Committee is composed of equal numbers of representatives. The following members

are part of the Audit Committee (as of 30 September 2021): Prof. Dr Edgar Ernst (Chairman),

Xaver Schiller (Vice Chairman), Marco Arcelli, Stefanie Blaser, Michael Heider and Dr Fredy Raas.

As Chairman of the Audit Committee, I fulfil the requirements for assuming the chair according

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to recommendations of the German Corporate Governance Code and the diversity concept for

the Supervisory Board of METRO AG, according to which the Chairman of the Audit Committee

should be independent. In other words, I am not affiliated with the company and its Management

Board or a controlling shareholder. Moreover, the Chairman of the Audit committee must have

special expertise and experience in the application of accounting principles and internal control

procedures. Naturally, he must also be familiar with auditing of financial statements. The Audit

Committee already meets the new stock corporation law requirement that at least one

committee member also has expertise in the field of accounting and at least one other

committee member has expertise in the field of auditing.

The Audit Committee held a total of 6 meetings in financial year 2020/21. The itemised

meeting attendance of the members of the Audit Committee can be found in the report of the

Supervisory Board. The Chairman of the Supervisory Board, Jürgen Steinemann, attended all

meetings as a permanent guest. The Management Board was represented by the Chairman of

the Management Board and the Chief Financial Officer. Representatives from various METRO

departments were available at the meetings to discuss specific topics. The auditor was present

for each agenda item that was relevant to the audit of the financial statements. The Audit

Committee also conducted separate reporting telephone calls concerning the business

development with the Chairman of the Management Board and the Chief Financial Officer

between the scheduled meetings.

In order to perform the duties of the Audit Committee, I frequently communicated with

Jürgen Steinemann as Chairman of the Supervisory Board and with the Management Board,

especially the Chief Financial Officer, outside the meetings to exchange information and ideas

on important topics and upcoming decisions. The exchange of information was supported by

individual discussions with the auditor and heads of various METRO departments. I notified the

Supervisory Board about the content of the discussions as well as about the work and

recommendations of the Audit Committee in each of its subsequent meetings.

Main contents of the committee meetings

November 2020 – The committee was briefed on the status of the annual financial statement

progress. We focused on the effectiveness and functioning of the group’s governance functions

(internal control systems, risk management system, internal audit and compliance). It was

followed by an update on the group tax planning. We were also updated about a project aimed

at improving and digitalising the internal financial reporting systems.

December 2020 – The Audit Committee routinely prepared the meeting of the Supervisory

Board in December and reviewed the annual and consolidated financial statements for financial

year 2019/20, the combined management report of METRO AG and the group for financial year

2019/20 as well as the combined non-financial statement contained in the combined

management report. The auditor reported on the results of the audits and was available to

answer additional questions and provide information in the absence of the Management Board.

In the presence of the auditor, the committee also discussed the results of the audit and

recommended to the Supervisory Board to approve the annual and consolidated financial

statements for financial year 2019/20 and to approve the Management Board’s proposal to the

Annual General Meeting 2021 on the appropriation of the balance sheet profit. The Audit

Committee also decided on passing on a recommendation to the Supervisory Board or the

Annual General Meeting 2021 to elect KPMG AG Wirtschaftsprüfungsgesellschaft as auditors for

financial year 2020/21. Furthermore, the Management Board provided information about

awarding of donations.

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February 2021 – The meeting was focused on the quarterly statement Q1 2020/21.

Furthermore, we were updated about utilisation of the financing framework. We passed a

resolution on a recommendation to the Supervisory Board to appoint the auditor for financial

year 2020/21, which included the following tasks: the audit of the annual financial statements

and the consolidated financial statements of METRO AG as of 30 September 2021 as well as the

combined management report for METRO AG and the group for financial year 2020/21; the audit

review of the condensed interim financial report as of 31 March 2021 as well as the interim group

management report for the period from 1 October 2020 to 31 March 2021; and the audit of the

combined non-financial statement for financial year 2020/21 in the form of a limited assurance

engagement. The Audit Committee based this decision on its discussion of the audit quality,

which was particularly based on the elements of quality assurance on the part of the auditor,

which included audit quality indicators and the auditor’s statement of independence. The quality

of the audit was already confirmed by the Audit Committee in September 2020 as part of the

Audit Committee’s self-assessment and rated as very good. As part of the recommendation for

the auditor election in December 2020, no deficiencies in the audit-related services to date were

identified that would argue against the election of KPMG as auditor. With regard to the internal

guideline on engagements of KPMG introduced in 2017, we passed a resolution on its adaptation

to current regulatory developments. In addition, we approved non-audit services provided by

the auditor that exceeded the threshold for approval of a delegate as set out in the internal

policy.

May 2021 – The focus of the meeting was the half-year financial report 2020/21. Once again,

we dealt with the assessment of the audit quality of the financial statements and obtained

supplementary feedback from the Accounting & Controlling department of METRO AG on

individual aspects. The committee routinely obtained information about the status of the

auditor’s approved non-audit services and the utilisation of the upper statutory cap. Supported

by the corresponding specialist division of METRO AG, we received information on the capital

market outlook of METRO. Furthermore, the meeting dealt with the key points ‘strategy/budget

2021/22’ including the investment planning as well as the half-year report on the governance

functions. We were given a status overview of the introduction of the Financial Market Integrity

Strengthening Act (FISG) and the significant changes to the work of the Supervisory Board that

will result from enforcing it. We also received information about the group tax planning.

July 2021 – With the participation of the members of the Presidential Committee, we

discussed the budget planning for 2021/22 and subsequent years and received an outlook on

key figures relevant to remuneration. Based on the information provided by the auditor about

the regulations of the Financial Market Integrity Strengthening Act (FISG), we passed a

resolution on the (future) right of the Management Board to participate in audit-related agenda

items of the Audit Committee meetings. Thereafter, we issued a recommendation for how this

should be handled in Supervisory Board meetings. The quarterly statement Q3 2020/21 was

routinely discussed. Additionally, we dealt with particularly important key audit matters and

critically reviewed their definition based on the continuous development of the business and, in

particular, the environment impacted by the Covid-19 pandemic. Due to new regulatory

requirements, we passed a resolution on adapting the guideline on engagements of KPMG and

received information about non-audit services provided by the auditor. With an update on

accounting standards, we inquired about the expected effects of changes to the IFRS standards

and other significant changes due to new external reporting requirements.

September 2021 – The resolution on the recommendation to approve the budget planning for

2021/22 and subsequent years was the focus of the meeting. Another topic was the report of the

Group Internal Audit department including the internal audit planning. We also passed a

resolution on a recommendation to the Supervisory Board to award another mandate to KPMG

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regarding the audit of the Related Parties Transaction Report 2020/21. Moreover, we

participated in the meeting of the Presidential Committee to discuss the performance targets for

the STI 2021/22.

Annual and consolidated financial statements, report on relationships with
affiliated companies 2020/21

At the meeting on 13 December 2021, the Audit Committee reviewed and discussed in detail the

annual financial statements and the consolidated financial statements, each of which received an

unqualified audit opinion from the auditor, the combined management report for METRO AG and

the group for financial year 2020/21, the combined non-financial statement contained in the

combined management report as well as the report on the company’s relationships with

affiliated companies for financial year 2020/21. The auditor reported on the results of the audit

and addressed the key audit matters and the accounting-related topics of their audit. After an

intensive exchange of views, the Audit Committee recommended that the Supervisory Board

take note of and approve the results of the audit of the annual financial statements and the

consolidated financial statements of METRO AG as of 30 September 2021, the combined

management report for METRO AG and the group for financial year 2020/21, the combined non-

financial statement contained in the combined management report as well as the report of the

Management Board on relationships with affiliated companies for financial year 2020/21,

endorse the results of the audit of the auditor and determine that no objections are to be raised.

Furthermore, the Audit Committee recommended that the annual financial statements and the

consolidated financial statements of METRO AG as well as the combined management report for

METRO AG and the group, including the non-financial statement contained in the combined

management report, be approved and that the annual financial statements of METRO AG thus be

adopted, and that the Management Board’s proposal to the Annual General Meeting for the

appropriation of the balance sheet profit be endorsed.

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After challenging, intensive months, I would like to conclude by thanking the Chairman of the

Supervisory Board, the auditor and the Management Board for their constructive and

dependable collaboration in financial year 2020/21.

Düsseldorf, 13. December 2021

The Audit Committee

Prof. Dr Edgar Ernst

Chairman of the Audit Committee

Information about the members of the Supervisory Board can be found on the website www.metroag.de/en in the
section Company – Supervisory Board.

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M E T R O S H A R E

METRO SHARE

Performance of the METRO share

For financial year 2020/21, the development of the stock markets was very volatile, partly due to

the ongoing Covid-19 pandemic. After a brief recovery phase in the summer months of 2020, the

stock market initially declined. Following the announcement of another lockdown, the DAX,

MDAX and SDAX reached their annual lows at the end of October 2020. With 11,457 points, the

SDAX recorded its annual low on 28 October 2020. However, the stock markets began to recover

when the first reports of successes in vaccine development were announced in November 2020.

At the end of 2020, the SDAX closed at 14,765 points. The recovery of the stock markets

continued with the gradual easing of government restrictions. In the summer of 2021, the various

indices temporarily reached all-time highs. The SDAX peaked on 2 September 2021 with 17,286

points and closed at 16,509 points on 30 September 2021.

These developments were also reflected in the METRO share price. Apart from the

development of the Covid-19 pandemic and the recovery of the hospitality industry starting in

Q3 2020/21, factors affecting the share price included the change in the shareholder structure.

The investor EP Global Commerce (EPGC) increased the share of METRO voting rights to

40.60% in connection with a second voluntary public takeover offer. As a result, the free-float

share decreased to 36.34%. This was the key reason for listing the METRO ordinary share in the

SDAX after the regular index review by the German stock exchange (Deutsche Börse) in March

2021. Subsequently, Meridian Stiftung and the Beisheim Group also increased their stake from

23.06% to 23.94%, so that the free-float proportion decreased further to 35.46%.

On 30 September 2021, the METRO ordinary share finished with a closing price of €11.24 in

Xetra trading on the Frankfurt Stock Exchange. This represents an increase of 32% over the

previous year. The operational recovery is also reflected in the share price. At the end of the

financial year, the price of the METRO ordinary share was only €0.98 below the pre-pandemic

level (on 11 February 2020, the WHO specified Covid-19 as the name for the infectious disease).

The preference share traded at €11.40 on 30 September 2021.

DEVELOPMENT OF THE METRO ORDINARY SHARE (%)

150

120

Peer Group

METRO

SDAX

1/10/2020

31/12/2020

31/3/2021

30/6/2021

30/9/2021

Peer group: Bidcorp, Eurocash Group, Marr, Performance Food Group, Sligro, Sysco, US Foods

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

T O O U R
S H A R E H O L D E R S

M E T R O S H A R E

METRO SHARE

Closing price

High

Low

Dividends

Dividend yield
based on closing price

Market capitalisation (billion)

Data based on Xetra closing prices

Source: Bloomberg

METRO SHARE DATA

Ticker symbol

Securities identification number

ISIN code

Reuters symbol

Bloomberg symbol

Number of shares

Ordinary share

Preference share

Ordinary share

Preference share

Ordinary share

Preference share

Ordinary share

Preference share

Ordinary share

Preference share

€

2019/20

2020/21

8.52

8.94

15.11

13.45

6.41

7.70

0.70

8.2

7.8

3.1

11.24

11.40

11.74

12.80

7.40

8.56

0.00

0.0

4.1

Ordinary share

Preference share

B4B

BFB001

B4B3

BFB002

DE000BFB0019

DE000BFB0027

B4B.DE

B4B GY

360,121,736

B4B3_p.DE

B4B3 GY

2,975,517

Exchange segment of the Frankfurt Stock Exchange

Prime Standard

Stock exchange

Frankfurt

Shareholder structure of METRO AG

In preparing the annual financial statements, the largest (indirect) shareholders of METRO AG –

based on the voting right notifications received by METRO AG in accordance with the German

Securities Trading Act (WpHG) – are EP Global Commerce GmbH with 40.60% of the voting

rights as well as Meridian Stiftung and the Beisheim Group, to which a total of approximately

23.94% of the voting rights are allocated in a pooling agreement. These 3 shareholders thus hold

a total of 64.54% of the voting rights. In addition, CECONOMY AG holds 0.99% of the voting

rights of METRO AG. Under the terms of the 2016 demerger agreement, these shares must not

be sold until 1 October 2023.

For more information about details of the pooling agreement between Meridian Stiftung and Beisheim Holding, see
chapter 7 Takeover-related disclosures

page 124 in the combined management report.

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

T O O U R
S H A R E H O L D E R S

M E T R O S H A R E

As of 30 September 2021, 35.46% of METRO AG shares are free-floating and held by a number

of national and international investors. Internationally they are mainly held by investors from

North America, continental Europe, the United Kingdom and Ireland.

SHAREHOLDER STRUCTURE1

as of 5/10/2021

FFS

MS/BH2

23.94%

Meridian Stiftung/Beisheim Holding

FFS

40.60%

EP Global Commerce

35.46%

Free-floating shares

100.00%

1 The information is in particular based on notifications of voting rights pursuant to the German Securities Trading Act that were received and published by
METRO AG.
2 Vote on exercising voting rights under the pooling agreement.

Market capitalisation

The market capitalisation of METRO AG was €4.1 billion at the end of September 2021. In

financial year 2020/21, a typical trading day at the Frankfurt Stock Exchange saw an average of

around 670,000 of METRO’s ordinary shares traded. On average, about 2,000 of the

significantly fewer liquid preference shares were exchanged on each trading day.

Dividend and dividend policy

The reported earnings per share (EPS) of continuing operations are €−0.15 (2019/20: €−0.40 for

continuing operations). In line with METRO’s dividend policy (payout ratio of 45% to 55% of

EPS), there are no planned dividend distributions in financial year 2020/21 for ordinary shares or

preference shares. Last year, the Management Board and the Supervisory Board had proposed a

dividend of €0.70 to the Annual General Meeting despite a negative EPS in the continuing

operations, since the reported EPS including discontinued operation actually amounted to €1.27

due to the positive transaction proceeds (sale of majority stake in METRO China and the Real

hypermarket business). Since no significant transaction proceeds were received this year and the

ongoing Covid-19 pandemic continues to cause uncertainties, the Management Board and the

Supervisory Board consider this proposal to be appropriate.

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

T O O U R
S H A R E H O L D E R S

M E T R O S H A R E

Analysts’ recommendations

METRO’s share price recovered strongly in financial year 2020/21 after the government

restrictions related to the Covid-19 pandemic were lifted as well as due to the development of

some countries above HoReCa market levels. The share price recovery was supported by a

continuous and significant increase in analysts’ target prices. 15 analysts regularly evaluated the

METRO share in financial year 2020/21 and published their reports. 3 analysts recommend

buying the METRO share; 10 analysts rate the METRO share as neutral in the medium to long

term; 2 analysts recommend selling the share. The median value of share price targets, which

usually only represent a short-term perspective for the next 6 to 12 months, was €10.40 at the

end of September 2021 (end of September 2020: €8.25).

Grade

Buy

Hold

Sell

Bank

Baader Bank

AlsterResearch

Invest Securities

Barclays

Berenberg

DZ Bank

HSBC

Independent Research

Jefferies

LBBW

M.M.Warburg

Société Générale

J.P. Morgan

Exane

BofA

Registered office

Share price
target (€)

Munich

Hamburg

Paris

London

Frankfurt

London

Frankfurt

London

Stuttgart

Hamburg

Paris

London

12.00

16.20

12.80

10.50

10.00

11.40

10.00

11.50

8.50

10.50

9.00

10.40

11.00

7.00

9.70

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

T O O U R
S H A R E H O L D E R S

M E T R O S H A R E

Investor Relations

The METRO Investor Relations team is in continuous dialogue with analysts, institutional

investors and retail investors. The team is guided by the principles of customer-focused capital

market support:

Topicality: assurance of information leadership

Continuity: consistency in external communications

Credibility: disclosure of accurate information

Equal treatment: same information in terms of time and content for all recipients

In addition to the regular quarterly and yearly reporting, the Investor Relations team is also

available for personal meetings at roadshows and conferences. It also conducts numerous

individual and group discussions, store inspections and telephone conferences. The team

continued this dialogue throughout the pandemic, in particular through virtual roadshows and

conference participation.

All information about the METRO AG share is available in German and English from the

Investor Relations section of the website.

Among other things, the website offers additional information about METRO’s corporate

strategy and business development, all current publications, the schedule of events and the

annual report. A webcast is available for all METRO events. The Investor Relations team can also

be contacted directly. The Annual General Meeting of METRO AG provides all shareholders with

the opportunity to learn about the current developments at METRO.

Its active membership in the German Equity Institute (Deutsches Aktieninstitut e. V., DAI) in

Frankfurt allows METRO to actively promote an investment culture with an affinity for equities in

Germany. METRO is also committed to the principles of open and continuous communications,

which is expressed in the company’s membership in the German Investor Relations Association

(Deutscher Investor Relations Verband e. V., DIRK) and its active involvement in the

Association’s activities.

Contact Investor Relations
METRO AG

Investor Relations

Schlüterstraße 1

40235 Düsseldorf, Germany

T +49 211 6886-1280

F +49 211 6886-73-3759

investorrelations@metro.de

www.investors.metroag.de/en

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

METRO

G O A L S A N D S T R A T E G Y

M E T R O

GOALS AND STRATEGY

METRO

Clear focus: METRO sees itself as a strong partner for professional customers, especially in

the HoReCa and Traders segments.

Long-term strategic value drivers: METRO relies on a sustainable, synergistic multichannel

strategy with clear added customer value. The combination of wholesale stores, delivery

business and digitalisation is a core element of this strategy.

Implementation in financial year 2020/21: METRO invested in the expansion of multichannel

elements and the intensification of customer relationships to emerge stronger from the

pandemic. The business developed better in its core countries than the respective HoReCa

sector as a whole.

Clear focus

METRO is a leading international food wholesaler, operating in over 30 countries worldwide

under the brands METRO, MAKRO, Aviludo, Classic Fine Foods, Davigel Spain, Pro à Pro and

Rungis Express. METRO sees itself in the role as a strong partner of choice for professional

customers. It pursues an attractive multichannel strategy, selling products and services through

748 wholesale stores and supply depots as well as the online marketplace METRO MARKETS.

METRO’s strategy is aimed at long-term, consistent growth of sales and earnings. The

wholesale business targets growing markets and attractive industry sectors that are

characterised by very strong customer relationships, a high number of recurring customers,

large shopping baskets and high productivity. In the long term, the industry benefits from the

rising tendency to out-of-home consumtion as well as the ongoing trend towards convenience

solutions.

Strategic value drivers

Alignment towards professional customers: the 2 core customer groups of METRO are

HoReCa and Traders. The HoReCa section includes hotels, restaurants, bars and cafés as well

as catering companies. The Traders section includes small grocery stores and kiosks.

Together, HoReCa and Traders generate around 66% of sales and drive growth. By focusing

on the core needs of our customers, we confirm our value proposition. METRO strives for high

customer retention and maximum exploitation of customer potential.

Multichannel strategy: the combination of wholesale stores and a rapidly growing delivery

business supports the increase in sales with our core customer groups, as the 2 channels

serve different customer needs and form a synergistic connection. To this end, METRO is

investing in the increased customer focus of the wholesale stores as well as in the expansion

and continuous improvement of the delivery business.

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

G O A L S A N D S T R A T E G Y

M E T R O

Digitalisation: the digitalisation of the customer experience represents another lever for

customer retention. The M-Shop ordering platform digitalises the customer ordering process.

The platform is already active in 20 countries and is used by more than 40,000 customers

every week. In addition, the METRO Companion app digitalises crucial customer contact

points. The app enables access to the various sales channels via smartphone. Among other

things, it replaces the METRO customer card when shopping at the wholesale store and offers

delivery customers access to the order assortment. Currently, more than 400,000 customers

use the METRO Companion app every month. Additional customer needs are addressed with

the online marketplace METRO MARKETS, which is especially geared towards professional

equipment for HoReCa customers. METRO MARKETS is available in Germany and Spain;

additional countries are planned. METRO also supports customers in the digitalisation of their

businesses, for example through DISH, an online platform for digital applications in the

hospitality industry.

Customer retention through Traders Franchising Model: moreover, METRO increases

customer loyalty through further measures and solutions adapted to local market conditions,

such as the Traders Franchising Model. METRO operates in a similar way as a franchisor with

its own brand identity. It provides products and offers additional services to the participating

independent grocery stores, such as training courses and assortment consultancy. The strong

customer retention of the Traders franchisees is reflected in average sales that are more than

10 times higher compared to other Traders customers. In financial year 2020/21, METRO had

over 8,000 customers in the Traders Franchising Model and generated more than

€500 million in sales with them in Poland, Romania, Russia, Bulgaria, Croatia, Serbia, Pakistan,

the Czech Republic and Slovakia.

Corporate sustainability: METRO’s main objectives are the promotion of environmentally and

socially responsible procurement, the expansion of a responsible and innovative product

range and the development of solutions to reduce food waste. In 2021, we tightened our

existing climate target: By 2040, we want to make our global business operations carbon

neutral, mainly through our own initiatives. Sustainability is an established part of METRO’s

business model as well as an indispensable part of the future strategy with focus on business

ethics, resource availability, talent acquisition and retention as well as customer demand and

regulation.

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

G O A L S A N D S T R A T E G Y

M E T R O

Implementation in financial year 2020/21

After the successful disposal of the retail business last year, the focus was on strengthening the

operational wholesale business. METRO invested in the expansion of multichannel elements and

intensification of customer relationships, allowing it to emerge stronger from the pandemic.

Covid-19: the regulatory restrictions related to the Covid-19 pandemic significantly restricted

the hospitality industry and posed challenges for our customers. METRO has continued to

operate the business without major restrictions and has supported customers in dealing with

the situation. The volatility of the restrictions brought the benefits of the multichannel offer

into focus for our customers, as they increasingly took advantage of the enormous flexibility

offered by the wholesale stores (for example no order lead time, no minimum order

quantities). METRO thus outperformed the respective HoReCa markets in the lockdown

phases and during the subsequent recovery in Germany and in some other Western European

countries with strong HoReCa performance. The Traders customer group, which benefits from

the continuing trend towards convenience solutions, was less affected by the pandemic-

related restrictions in its business operations compared to the hospitality industry.

Investments in the multichannel business and digitalisation: despite the temporary decrease

in the hospitality and tourism industry, METRO continued to invest in the expansion of its

multichannel business (for example by opening new depots), in digitalisation (for example by

introducing DISH Order, a software that allows end customers to order from restaurants) and

in the expansion of its distribution structures.

Acquisitions strengthen delivery business, disposals tighten the profile: the country

portfolio of METRO is regularly reviewed with regard to the feasibility of a local market

leadership and the attractiveness of the respective markets. Accordingly, the decision was

made in financial year 2020/21 to exit the countries Japan and Myanmar. By contrast, METRO

strengthened its competence and positioning in the hospitality wholesale business in Western

Europe through the acquisitions of AGM in Austria (under competition law review), Aviludo in

Portugal and Davigel in Spain as well as the investments in Filpromer in France.

For more information about sustainability at METRO, see chapter 2.3 Combined non-financial statement of METRO
AG

page 43 in the combined management report.

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

1 OVERVIEW OF FINANCIAL

105

6 REMUNERATION REPORT

YEAR 2020/21
AND OUTLOOK

2 PRINCIPLES OF THE

GROUP

2.1 Group business model

2.2 Management system

105

121

The remuneration system for members of the
Management Board

Remuneration of members of the
Supervisory Board

124

7 TAKEOVER-RELATED

DISCLOSURES

2.3 Combined non-financial statement of

METRO AG

131

8 SUPPLEMENTARY NOTES

FOR METRO AG
(PURSUANT TO THE
GERMAN COMMERCIAL
CODE)

3 ECONOMIC REPORT

3.1 Macroeconomic and sector-specific

parameters

3.2 Asset, financial and earnings position

Financial and asset position

Earnings position

4 REPORT ON EVENTS

AFTER THE CLOSING DATE
AND OUTLOOK

Report on events after the closing date

Outlook

5 OPPORTUNITIES AND RISK

REPORT

104

Risk management system and internal
control system

Description of the opportunity and risk
situation

Management’s overall assessment of the
opportunity and risk situation

C O M B I N E D
M A N A G E M E N T R E P O R T

1 O V E R V I E W O F F I N A N C I A L Y E A R 2 0 2 0 / 2 1
A N D O U T L O O K

COMBINED MANAGEMENT
REPORT

1 OVERVIEW OF FINANCIAL YEAR 2020/21
AND OUTLOOK

From financial year 2020/21 onwards, the differentiation of reporting into continuing and

discontinued operations in accordance with IFRS 5 will no longer apply, since the disposal of the

majority stake in METRO China and the hypermarket business was completed in financial year

2019/20. The subsequent presentations in the reporting period therefore refer to the group units

that were reported as continuing operations in the previous year.

During financial year 2020/21, the METRO portfolio was changed through smaller acquisitions

and country exits that were decided and initiated:

Acquisitions:

Davigel in Spain, initial consolidation on 1 January 2021, part of the segment METRO Western

Europe (excluding Germany), €13 million sales contribution in financial year 2020/21 since

consolidation

Aviludo in Portugal, initial consolidation on 1 March 2021, part of the segment METRO

Western Europe (excluding Germany), €74 million sales contribution in financial year 2020/21

since consolidation

Country exits:

Japan: Discontinuation of the operational business at the end of October 2021, one-time

negative effect of €39 million on EBITDA in Q4 2020/21 (transformation costs)

Myanmar: Discontinuation of the operational business at the end of October 2021, one-time

negative effect of €2 million on EBITDA in Q4 2020/21 (transformation costs)

Classic Fine Foods Philippines: Discontinuation of the operational business at the end of

October 2021, one-time negative effect of €4 million on EBITDA in Q4 2020/21

(transformation costs)

Earnings position

Sales in local currency were at the same level as the previous year (0.0%); like-for-like sales

decreased by −0.4% and reported sales decreased by −3.4% to €24.8 billion

Adjusted EBITDA was €1,171 million (2019/20: €1,158 million). Transformation costs of

€65 million (2019/20: €47 million) were incurred; earnings contributions from real estate

transactions reached €60 million (2019/20: €3 million). The reported EBITDA reached

€1,166 million (2019/20: €1,113 million)

The profit or loss for the period was €−45 million (2019/20: €−140 million continuing

operations)

Earnings per share: €−0.15 (2019/20: €−0.40); in financial year 2019/20 earnings per share for

discontinued operations were €1.67 and included transaction proceeds

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

C O M B I N E D
M A N A G E M E N T R E P O R T

O U T L O O K O F M E T R O

Financial and asset position

The net debt was reduced to €3.5 billion (30/9/2020: €3.8 billion)

Investments amounted to €0.8 billion (2019/20: €0.6 billion)

Cash flow from operating activities reached €1.2 billion (2019/20: €0.6 billion)

The balance sheet total amounts to €12.8 billion (30/9/2020: €13.2 billion)

Equity: €1.8 billion (30/9/2020: €2.0 billion)

Long-term rating: BBB− (Standard & Poor’s)

Outlook of METRO

The outlook is based on the assumption of stable exchange rates and no further adjustments to

the portfolio (that is, without Japan and Myanmar, with Aviludo and Davigel Spain). The relevant

opportunities and risks that influence the outlook are explained in the opportunities and risk

report. The sales and earnings outlook depends particularly on the further development of the

Covid-19 pandemic in financial year 2021/22. Temporary and limited governmental restrictions on

social life, especially in H1 of financial year 2021/22, have been taken into consideration.

Sales
The Management Board expects a total sales growth of 3% to 7% (2020/21: 0.0% with Japan and

Myanmar, 0.1% without Japan and Myanmar) for financial year 2021/22, hence reaching the pre-
pandemic level5. The HoReCa business is expected to be the main growth driver, especially due
to high momentum in delivery. All segments will contribute to the growth. For Western Europe

(excl. Germany), a significantly overproportionate growth is expected. Germany is expected to

grow below the group range, also due to the reduction of the tobacco business.

Earnings
The Management Board further expects an EBITDA adjusted on the level of the past financial

year 2020/21 (€1,187 million without Japan and Myanmar). For Western Europe (excl. Germany),

a significant growth is expected. The segment Others was supported by one-time effects in the

mid double-digit million euro range in financial year 2020/21. Due to this and further

digitalisation efforts, it will therefore be noticeably below the level of the previous year.

5 On a comparable, operational level.

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

C O M B I N E D
M A N A G E M E N T R E P O R T

2 P R I N C I P L E S O F T H E G R O U P

2 PRINCIPLES OF THE GROUP

2.1 Group business model

METRO is a leading international food wholesaler. The group is headed by METRO AG, which

acts as the central management holding company. It performs group management functions,

among others in the areas of finance, controlling, legal and compliance as well as purchasing and

human resources. Central management and administrative functions for METRO are anchored

within METRO AG.

As a wholesaler, METRO operates globally with 681 stores in 24 countries. METRO is active
with the delivery business (Food Service Distribution, FSD) in another 10 countries.6 It includes
the METRO delivery service as well as the delivery specialists Classic Fine Foods, Pro à Pro,

Rungis Express, Aviludo and Davigel Spain.

HoReCa and Traders are core customer groups of METRO. The HoReCa section includes

hotels, restaurants, bars and cafés as well as catering companies, canteen operators and street

food retailers. The Traders section includes small grocery stores and kiosks.

The majority of all customer groups are small and medium-sized enterprises as well as sole

traders. METRO helps them manage their business challenges more effectively. To this end, they

are provided with sustainable solutions that offer added economic value.

The group’s digitalisation activities are bundled under the Others segment. This segment also

includes real estate, logistics, IT, advertising and procurement services.

OVERVIEW OF METRO

METRO

METRO
Germany

METRO
Western
Europe
(excl.
Germany)

METRO
Russia

METRO
Eastern
Europe
(excl. Russia)

METRO
Asia

Others

– Hospitality Digital

– METRO MARKETS

– METRO PROPERTIES

– Other service companies

6 As of 30 September 2021. METRO Japan, METRO Myanmar and CFF Philippines: Country exit at the beginning of financial year 2021/22.

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

C O M B I N E D
M A N A G E M E N T R E P O R T

2 P R I N C I P L E S O F T H E G R O U P

METRO

As a multichannel operator, METRO combines a wide network of modern

wholesale stores with a wide-ranging delivery service (FSD). It is an

internationally leading player in this field. With its segments METRO Germany,

METRO Western Europe (excluding Germany), METRO Russia, METRO Eastern
Europe (excluding Russia) and METRO Asia, METRO is active in 34 countries7. It
operates 681 wholesale stores in Europe and Asia under its brands METRO and

MAKRO. Its commercial customers are mainly hotels, restaurants, catering

companies, independent retailers as well as service providers and authorities.

METRO offers them a portfolio of products and solutions that has been tailored

to their specific requirements. In the area of Food Service Distribution (FSD),

METRO maintains a strong presence with its METRO delivery service and the

delivery companies Classic Fine Foods, Pro à Pro, Rungis Express, Aviludo and

Davigel Spain. Classic Fine Foods is an Asian delivery company for a wide range

of deli food with premium customers, mainly in Asia and the Middle East. Pro à

Pro delivers products to commercial customers across France, in particular in

the fields of corporate catering, canteens and system catering. Rungis Express is

an important upmarket food delivery company in Germany that mainly caters to

hotels, restaurants and caterers (HoReCa). As the second-largest Portuguese

food supplier, Aviludo focuses on independent restaurateurs, canteens and

restaurant chains. The customer base of the Spanish FSD company Davigel also

primarily comprises independent restaurateurs as well as hotel chains.

Others

The Others segment mainly includes the Hospitality Digital, METRO MARKETS

and METRO PROPERTIES business units. Hospitality Digital pools the group’s

digitalisation efforts for customers from the hospitality sector. It includes the

development of customised digital solutions for HoReCa customers. METRO

MARKETS is further expanding its digital portfolio for independent

restaurateurs with a new B2B online marketplace. Through this distribution

channel, METRO offers non-food articles from its own product range as well as

products from third parties. The sales and pro rata costs generated through

METRO MARKETS were included in the respective operating units in the

previous year, while METRO MARKETS’ development activities beyond it were

included in the Others segment. This allocation in the operating units was not

continued in financial year 2020/21, so that all sales revenues and costs are now

reflected in the Others segment. METRO PROPERTIES develops, operates and

markets an international real estate portfolio. For additional business such as

subletting, METRO benefits from the business unit’s extensive market expertise.

Thus the real estate segment makes a sustainable and significant contribution to

the overall business success of METRO. Other service companies are also

assigned to this segment.

7 As of 30 September 2021. METRO Japan, METRO Myanmar and CFF Philippines: Country exit at the beginning of financial year 2021/22.

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

C O M B I N E D
M A N A G E M E N T R E P O R T

2 P R I N C I P L E S O F T H E G R O U P

Delivery

30/9/2021

FSD, Rungis Express,
METRO MARKETS

FSD

FSD, CFF, Pro à Pro

FSD

FSD, Rungis Express

FSD, Aviludo Group

FSD, METRO MARKETS,
Davigel Spain

FSD

FSD, CFF

FSD

STORE NETWORK BY COUNTRY AND SEGMENT

as of the closing date of 30/9

thereof
Out-of-Store
(OOS)2

Stores

METRO

Depots

30/9/2021

102

240

196

681

(68)

(0)

(98)

(49)

(8)

(12)

(8)

(32)

(207)

(80)

(9)

(6)

(7)

(1)

(25)

(8)

(5)

(13)

(27)

(22)

(11)

(159)

(30)

(9)

(10)

(49)

(563)

194

METRO Germany

Belgium

France

Italy

Netherlands

Austria

Portugal

Spain

METRO Western Europe (excl. Germany)

METRO Russia

Bulgaria

Kazakhstan

Croatia

Moldova

Poland

Romania

Serbia

Slovakia

Czech Republic

Turkey

Ukraine

Hungary

METRO Eastern Europe (excl. Russia)

India

Japan1

Pakistan

METRO Asia

Total

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

C O M B I N E D
M A N A G E M E N T R E P O R T

2 P R I N C I P L E S O F T H E G R O U P

Countries without stores

China

Indonesia

Malaysia

Myanmar1

Philippines1

Switzerland

Singapore

United Arab Emirates

United Kingdom

Vietnam

CFF

FSD

CFF

Rungis Express

CFF

FSD = Food Service Distribution, CFF = Classic Fine Foods

1 METRO Japan, METRO Myanmar and CFF Philippines: country exits at the beginning of financial year 2021/22.

2 OOS refers to the existing METRO store network and includes METRO stores that supply from the store as well as stores that operate their own depot in the store.

3 Depot (Aveira) temporarily closed and did not contribute to revenue in financial year 2020/21.

4 18 CFF depots + 1 Myanmar depot.

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2.2 Management system

METRO focuses strategically on creating additional customer value for the wholesale business.

The objective is to increase the company value sustainably. This principle is also reflected in our

internal management system. METRO uses the key performance figures described in the

following for the planning, management and control of our business activities. Selected key

performance indicators of our management system (sales growth, EBITDA and Return on Capital

Employed) form the basis for the Management Board’s variable remuneration component.

The focus of the group’s operational management is on the value drivers that have a direct

impact on the company’s medium- and long-term targets and are directly related to the

strategy.

The first important key performance indicators for METRO are the exchange rate-adjusted

sales growth and the EBITDA excluding earnings contributions from real estate transactions and

transformation costs. Our management system also makes use of other significant performance

indicators, which are explained in the following.

MANAGEMENT SYSTEM

Total sales

Growth

(adjusted) EBITDA
EBIT
Profit or loss for the period
Earnings per share

Investments
Net working capital
Net debt
Free cash flow (conversion)
Return on Capital Employed

Operational earnings power

Company value

Capital deployment

Key performance indicators describing the earnings position
The first of our most important key performance indicators for our operational business is the

exchange rate-adjusted total sales growth. In financial year 2020/21, the development of like-

for-like sales growth was used as the most important performance indicator in addition to total

sales growth. However, since the expansion of the store-based business via new locations has

become less important in recent years, the development of like-for-like sales and total sales have

recently converged strongly. From financial year 2021/22 onwards, the focus will increasingly be

on total sales and the variable remuneration of the Management Board will be switched from

like-for-like sales growth to total sales growth adjusted for currency effects and portfolio

changes. Regarding total sales growth adjusted for exchange rate and portfolio changes, the

focus is on the control function of the portfolio. The key figure reflects a change in sales

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adjusted for significant divestments. Significant acquisitions within the financial year are only

included in the key figure in the following year.

The second of our most important key performance indicators is EBITDA excluding earnings

contributions from real estate transactions and transformation costs, derived from non-

recurring expenses related to the concentration on the wholesale business and the associated

restructuring measures as well as the closure of national subsidiaries. In light of the strategic

portfolio streamlining and the associated focus on the wholesale business, METRO has

presented this key performance indicator as adjusted EBITDA in addition to reported EBITDA

since financial year 2019/20. Adjusted EBITDA reflects the operating efficiency of METRO in a

transparent format. Irrespective of it, the development of real estate assets and the proceeds

from divestments remain core components of the group’s real estate strategy.

Other important key performance indicators of METRO are the profit or loss for the period

and the earnings per share. These key performance indicators ensure that the tax and net

financial result are given consideration in addition to the operational result and thereby allow for

a holistic assessment of METRO’s earnings position from the perspective of the shareholders.

For more information about these key performance indicators, see chapter 3 Economic report – 3.2 Asset, financial
and earnings position – earnings position

page 77 .

Key performance indicators relating to the financial and asset position
The management of METRO’s financial and asset position aims at sustainably assuring liquidity

and arranging cost-effective sources for the financing requirements of our subsidiaries.

For more information about the financial and asset position, see chapter 3 Economic report – 3.2 Asset, financial and
earnings position – financial and asset position

page 70 .

The key performance indicators used in this area also include the investments, which are

planned, reported and audited both in aggregate for the group as well as separately for the

segments. Investments are defined as additions to non-current assets (excluding financial

instruments and deferred tax assets).

Another focal point in the area of the financial and asset position are regular analyses of the

net working capital, which are carried out for the purpose of managing the operational business

and capital deployment. Developments in net working capital over time result from changes in

stock inventories, trade receivables and trade liabilities. Receivables from suppliers are reported

within ‘Other financial and other non-financial assets’.

The net debt and free cash flow are also used as key performance indicators to manage

METRO’s liquidity and capital structure. The net debt results from the balance of financial

liabilities (including liabilities from leases), cash or cash equivalents and short-term financial

investments. A simplified cash flow definition, focusing on the main cash flow components, is

used for the free cash flow. The simplified free cash flow is calculated as adjusted EBITDA less

lease payments and cash investments (excluding mergers and acquisitions) +/− changes in net

working capital. The simplified cash flow is also used to determine the free cash flow

conversion, which serves as a measure of the group’s ability to transform the generated income

into cash inflows. The free cash flow conversion results from the ratio between the simplified

free cash flow and adjusted EBITDA after lease payments.

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Value-oriented key performance indicators
The key performance indicator Return on Capital Employed (RoCE) is still used to assess the

operational business. This key figure measures the Return on Capital Employed (RoCE = EBIT /

average capital employed) in a certain period under review and allows for an assessment of the

performance of the group’s individual segments.

The resulting RoCE is benchmarked against the respective segment-specific cost of capital

before taxes. It represents a minimum yield on the employed capital at market rates and is based

on capital market models.

METRO also frequently uses value-oriented key performance indicators to assess both

prospective and past investments. Accordingly, METRO uses the discounted cash flow method,

the key figure economic value added (EVA) and other liquidity-oriented key performance

indicators such as the amortisation period to form its investment-related decisions.

2.3 Combined non-financial statement of METRO AG

With this chapter, METRO AG fulfils its duty to produce a non-financial statement (NFS) for the

holding company, pursuant to § 289b–e of the German Commercial Code (HGB), and a non-

financial group statement, pursuant to § 315b–c in conjunction with § 289c–e of the German

Commercial Code (HGB), in the form of a combined non-financial statement. As a separate

chapter, this declaration constitutes a part of the combined management report. Unless stated

otherwise, the concepts described here apply to the entire group as well as the holding

company.

The NFS was produced in consideration of the GRI standards for corporate responsibility

reporting and the UN Global Compact. The contents are not subject to statutory audits of the

annual and consolidated financial statements, but are part of a limited assurance business audit

according to ISAE 3000 by KPMG AG Wirtschaftsprüfungsgesellschaft. The audit opinion is

available at www.metroag.de/cr-report-2020-21/assurance.

Business model

For more information about METRO’s business model, see chapter 2 Principles of the group – 2.1 Group business
model

page 37 .

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METRO SUSTAINABLE
The framework for our actions and at the same time the driver for all our activities aimed at

increasing sustainability for our customers is our sustainability approach METRO SUSTAINABLE.

METRO’s core objective is to drive the transformation towards responsible and sustainable

business practices – within our own business operations, but above all in our collaboration with

our suppliers and customers. By reconciling our business imperative and goals with the needs of

nature as well as current and future generations, we can remain successful in the long term and

overcome the conventional limits of growth for us, our stakeholders and society as a whole.

In financial year 2020/21, we conducted a materiality analysis in accordance with the

requirements of the German Commercial Code (HGB) and verified our sustainability approach.

The result was confirmed by the members of the Sustainability Committee and the Management

Board. The aspects and issues identified in the analysis are the content of this NFS and comply

with the requirements of the HGB for the reporting of non-financial content.

Embedded in our corporate strategy, we pursue our operational sustainability strategy with

METRO SUSTAINABLE. The goal is to address the issues that are most material to us to ensure

that our sustainability activities cover the aspects and concerns that have the greatest impact

on our business and that we can leverage through our business activities – together with our

partners and customers. With our focus on the food sector, it covers a total of 8 focus areas.

With regards to our customers, we already transferred this strategy to our concept ‘My

sustainable restaurant’ in financial year 2019/20 in order to promote sustainable gastronomy as

a partner of independent companies and make it tangible and realisable.

Within the 8 focus areas, we concentrate on 3 key topics:

1. We want to make our range of products and services more sustainable by positively

influencing the availability, quality and health as well as the social and environmental safety

of food. We also want to offer more organic and sustainable products.

2. We promote more conscious consumption by finding solutions for a balanced ratio of

proteins.

3. By pooling our partnership strengths, we fight against food waste.

At the same time, we are aware of our responsibility and opportunities when we stand up for

human rights, seek innovative solutions in the field of packaging and plastics, make a positive

contribution to climate protection, make the sourcing of raw materials more sustainable and

promote diversity and inclusion. We achieve it particularly through the discourse with internal

and external stakeholders such as employees, customers, suppliers and business partners, local

communities, NGOs, political representatives, investors, competitors and committees. Covid-19

has not resulted in any fundamentally new issues for us. However, challenges and opportunities

related to the aforementioned topics have arisen from the pandemic and have become more

prominent. In particular, aspects such as protecting the health of customers, employees and

suppliers have become more important.

For more information go to ‘Employee interests’ – ‘Occupational safety in times of Covid-19
‘Social matters’ – ‘Global labour and social standards in the supply chain

page 58 ’.

page 54 ’ as well as

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Actively managing sustainability
In line with METRO AG’s strategy, sustainability is systematically and organisationally entrenched

in the core business. Sustainability management takes into account interdependencies between

economic, environmental and social aspects in an efficient, solution-oriented manner. The

Management Board of METRO AG is involved in the topics presented here and is regularly

updated about their progress by the Sustainability Committee. Moreover, the remuneration of

the Management Board and the global senior management is linked to the assessment of

METRO’s sustainability performance e.g. in the rating of the Dow Jones Sustainability Index

(DJSI).

As the highest sustainability body in the company, the Sustainability Committee provides the

strategic framework and group-wide goals and facilitates the exchange of information on

sustainability issues at the highest management level – sometimes also with external input from

guest speakers. To adequately respond to the specific market and customer requirements, the

METRO companies manage the operational implementation of overarching sustainable

development goals within this framework. They are responsible for working on the relevant

sustainability issues, for defining and implementing specific targets and measures and for

monitoring their success. The committee is chaired by 2 representatives from the top

management, who are regularly rotated. Other members of the committee are:

People in charge of corporate responsibility at METRO AG

Representatives of the core functions procurement, quality assurance, communication as well

as energy management/real estate sustainability

Representatives of the METRO national subsidiaries

Sustainability management is closely linked to our opportunity and risk management through

formalised reporting and assessment of sustainability-related opportunities and risks. This

enables the Management Board to systematically identify, evaluate and control deviations from

the sustainability goals and the associated opportunities and risks.

In accordance with § 289c Section 3 Sentence 1 Nos. 3 and 4 of the German Commercial

Code (HGB), there are no reportable risks for financial year 2020/21 with regard to our material

topics.

Our stakeholders evaluate all sustainability measures implemented, for example through

ratings. These assessments by independent third parties show us progress and potential for

improvement in our actions and are thus an important motivation and management tool for us.

ISS ESG (Institutional Shareholder Services – Environmental, Social, Governance) already

awarded the prime status C+ (on a scale from D– to A+) to METRO in April 2020 already to

recognise METRO as a leader in the industry sector. The next assessment is expected in 2023. In

financial year 2020/21, we were once again listed in the Food & Staples Retailing group in the

internationally important Dow Jones Sustainability Index World and Europe. In 2021, METRO was

also again listed in the FTSE4Good index. New results at CDP were last published in December
20208. METRO improved its CDP Climate Change score to an A (F to A scale) in 2020 and is
recognised by NGO CDP as a leader in this category and hence included on the ‘A List’ for

commitment to tackling climate change. In addition, METRO was also assessed by CDP in the

Water Security and Forests categories. In the Water Security category, METRO was able to

maintain its B rating. The rating improved in 3 out of 4 assessed Forests categories: from B– to B

in the Palm Oil and Timber categories. In the Cattle category, METRO was rated C after a D

rating in the previous year. The B– rating in the Soy category stayed the same.

8 The score for CDP 2021 are published after the assurance date of this annual report.

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Environmental matters
Our approach is to significantly reduce the climate-relevant emissions caused by our business

operations and resulting from our supply chain as well as to decrease our consumption of
natural resources9. We do this by focusing on behavioural change (Energy Awareness
Programme) and investment aimed at increasing our energy and resource efficiency (Energy

Saving Programme). We also operate a global energy management system that identifies

potential savings in our stores and monitors our overall savings targets. In financial year 2020/21,

we reduced electricity consumption in our METRO stores by 7.8% in comparison to financial year
2018/19 and thus clearly exceeded our target of 5.4%10. Furthermore, we are also converting our
cooling systems to natural refrigerants (F-Gas Exit Programme), insofar as it is possible. This

reduces our energy requirements as well as our costs. In financial year 2020/21, among other

things, we invested €4 million in METRO’s Energy Saving Programme, which saves us

approximately €1 million in energy costs each year.

Examples of measures in the overall area of environmental matters in the reporting period

are:

Transcritical ejector refrigeration plants were put into operation in Belgium, Bulgaria, France,

Germany, Italy, Poland, Romania and Russia. In Russia, we also spent €1.9 million on

optimising refrigeration units with glass doors in 18 wholesale stores to save energy. In total,

we invested €31.8 million in the so-called F-Gas Exit Programme.

Another 14 photovoltaic systems were installed in France, India, Italy, Pakistan, Spain and

Hungary with a total additional capacity of 2,976 kWp.

Charging stations for electric vehicles of METRO customers have been installed at 5

wholesale stores in Bucharest and Berlin-Friedrichshain, among others. In Portugal and

Hungary, all METRO wholesale stores are now equipped with charging stations. At the

Düsseldorf Campus, more than 260 employees already use electric vehicles as company cars,

whose emissions are offset by certificates for hydroelectric power plants. In France and Italy,

we have integrated another electric truck to each delivery fleet.

METRO uses an internal CO2 price of €50 per tonne of CO2, mainly to approve energy-efficient
projects with lower financial savings. METRO is a member of the Task Force on Carbon Pricing in

Europe, which aims to put a price on all relevant carbon emissions and thus achieve market- and

competition-based decarbonisation. In addition, we carried out a climate change scenario

analysis based on the Task Force on Climate-related Financial Disclosures (TCFD) method for

the local and international supply chain of vegetables in the reporting period.

This is METRO’s response to risks identified in initial scenario analyses – as recommended by

TCFD – in our business operations as well as in our supply chain:

Physical risks resulting from extreme weather events and water stress (scarcity or flooding)

Risks of business interruptions due to extreme weather events and risks caused by declining

economic power
Transition risks such as rising prices for CO2 emissions (with short-term impact on costs and
product prices)

Risks of resource scarcity and associated price increases (for example for agricultural

products in the next 5 to 10 years)

9 For the METRO AG holding company, the aspects of food waste and resource-efficient business operations are not material due to its business orientation, but

rather only in relation to the operating units of the METRO group.

10 Effects of Covid-19 were observed only locally and with small fluctuations. We cannot quantify the exact impact of the pandemic on our energy consumption

performance. Therefore, the key figures presented here as well as the conversions into CO2 equivalents were included in the reporting in relation to the base year
2011 or reporting period 2018/19. The corresponding assessments refer to this basis of comparison.

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Risks caused by investments in new technologies (carbon-neutral cooling units planned

worldwide until 2030) and investments in the generation of renewable energies (extensive

installation of solar systems planned until 2030)

We incorporate these risks in our medium-term risk management and assess risks for sales and

costs, particularly those based on rising prices and decreasing availability of resources, taking

social concerns into account. No reportable risks as defined in § 289c Section 3 Sentence 1 Nos.

3 and 4 of the German Commercial Code (HGB) were identified.

Other key topics in relation to resource-efficient business operations are the prevention of

waste, the recovery and recycling of waste materials and the reduction of water consumption.

Compared to the previous year, we were able to reduce the volume of waste by 6.7% and the

recycling rate is 63.3%. Water consumption decreased by 1.7% compared to the previous year.

Overall, we met our target of saving 5% water compared to 2016/17, with a current reduction of

9.7%.

Reduction of food waste
In line with the Consumer Goods Forum (CGF) target, we are committed to reducing food waste

in our operations by 50% by 2025 compared to 2017. We measure, monitor and report progress

against the Food Loss & Waste (FLW) Protocol and are confident of achieving our target. We are

tackling food waste comprehensively, with a 5-pillar strategy from farm to table: (1) supplier

engagement, (2) food waste reporting, (3) (technological) food waste solutions, (4) customer

and partner engagement, and (5) stakeholder and industry engagement.

Key initiatives are helping us achieve our goal:

In 22 countries, we work with food bank organisations to pass on unsold food to those in

need. In 10 countries, we are working with TooGoodToGo to accomplish this goal and offer it

as a solution for our customers. So far, this has ‘saved’ more than 180,000 meals, which
corresponds to a saving of 450 tonnes of CO2.
METRO is a member of the World Resources Institute’s (WRI) ‘10x20x30’ initiative, which calls

on the world’s 10 largest food retailers to commit at least 20 of their suppliers to cutting their

food waste in half by 2030, as outlined by United Nations Sustainable Development Goal 12.3.

METRO AG and METRO Turkey have already jointly engaged more than 30 suppliers.

We work with various technical solutions to reduce food waste, depending on availability and

demand. In Turkey, we use Whole Surplus to analyse food waste hotspots and disposal routes.

In Poland, we are running a ‘Wasteless’ pilot project using artificial intelligence (AI) powered

technology to adjust prices for perishable goods and thus reduce food waste in our stores.

New climate protection target by 2040
In 2021, we tightened our existing climate target: by 2040, we want to make our global business

operations carbon neutral, mainly through our own initiatives. With the 37.3% savings we have

achieved so far, we are on the right track. From October 2020 to September 2021, METRO
generated 236 kg of CO2-equivalents per square metre of selling and delivery space. This
compares to 247 kg in the same period last year. In 2019, METRO expanded the climate target to

the supply chain and as the first German wholesale company set a recognised science-based
target for itself. In it, METRO AG undertakes to reduce its Scope 1 and Scope 2 CO2 emissions by
60% per square metre of selling and delivery space by 2030 compared to 2011. A reduction of

34.1% has been achieved in this area since 2011. Furthermore, METRO AG is committed to
reducing absolute Scope 3 CO2 emissions (supply chain) by 15% by 2030 compared to 2018. Our
goals for Scope 1 and Scope 2 are thus in line with the reductions required to keep global

warming well below 2°C by 2100 compared to pre-industrial levels.

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Employee interests

Sustainable human resources (HR) strategy
By fully focusing on the wholesale business, we are setting the course for our future. Our

employees are the key success factor in this business model. They implement our strategy and

bind customers to our company as partners through long-term relationships. It is therefore

particularly important to us to create an inclusive, appealing, open-minded and inspiring work

environment for our employees. We firmly believe that only satisfied employees who are

empowered in accordance with their capabilities and motivation can offer a first-class customer

experience.

Our underlying holistic HR approach with customised initiatives and programmes spans the

entire employee experience life cycle – from recruitment across various career and life stages to

retirement models. At the same time, it creates a consistent and METRO specific employee

experience with global standards.

The involvement of the Management Board or the management of the various national

subsidiaries and service companies often already takes place during the development phase of

the HR concepts. This ensures a proper balance between adaptation to local needs and

standardisation throughout the group. For example, in 2020 our Guiding Principles were revised

by an international, cross-functional project group in which members of the Management Board

as well as employees from the countries were equally involved. The objective was to define these

guidelines even more clearly, to make them understandable and more tangible for all employees

and to highlight the uniqueness of the METRO culture. We relaunched the Guiding Principles at

the beginning of the reporting period and successively conveyed them until 21 May 2021 – our

first METROheroes Day, on which we celebrated our cohesiveness and thanked our employees all

over the world.

The Guiding Principles are the cultural glue in our HR processes at METRO. They provide our

employees with guidance for their conduct and decisions on our way to becoming a

multichannel wholesaler.

Our engagement levels, which have been consistently rising since 2011 and are well above the

industry average, are proof that our employees are doing their best every day to jointly achieve

the goals of the group. At the same time, the survey provides us with important insights for

continuous improvement directly from the workforce. With our HR initiatives, we are

contributing to reinforce this motivation, to encourage teamwork and to promote

entrepreneurial thinking, open-mindedness and taking responsibility.

Our focus is on the following areas:

Using the Guiding Principles as the foundation of our HR processes to create a consistent

employee experience

Promoting diversity and inclusion at all levels of the company as a driver for sustainable

business success

Development of our talent management and investments in our employer brand in order to fill

positions in our company with the most talented employees

Further develop our performance management process with a clear focus on development to

promote a performance-driven culture

Increasing efficiency through conscious use of our resources and continuous improvement of

our processes

With the continuing of Covid-19, our familiar and habitual ways of communication and working

were substantially changed. In this phase it was particularly important for us to give our

employees the space to experiment in order to find the best ‘New Ways of Working’ in a hybrid

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work environment, especially at team level. Along this line, we initiated a project organisation

that compiles the positive findings, discusses them and translates them into concepts so they

can serve as inspiration in the various dimensions of ‘New Ways of Working’ for as many teams

as possible.

This project complements the above strategic focal points with a new perspective on

collaboration and communication in a hybrid work environment.

Employee recruitment
In the competition to hire the best professionals and managers, our goal is to position METRO as

an attractive employer and to attract qualified, talented people to our company. Through various

activities in the field of talent acquisition, we identify and recruit suitable professionals and

managers for METRO on the labour market. This approach enables us to successfully and

sustainably fill critical roles for the business in order to strengthen the company’s own workforce

and to move the company forward by securing our human capital.

In order to attract suitable employees, METRO positions itself as an attractive employer

through target group-oriented communication on various channels.

Our main activities:

By recruiting and training junior employees for the wholesale sector, we are able to develop

managers from our own ranks. Therefore, we offer various internship, trainee and

apprenticeship programmes throughout the group.

In order to reach and attract specialised, experienced professionals and managers, we invest

in direct sourcing, talent pooling and candidate relationship management activities.

The definition of relevant and business-critical target groups and the analysis of their

potential touchpoints with METRO enable target group-oriented and focused communication

in order to position METRO as an attractive employer brand. Examples of communication

channels include career fairs (also virtual ones), social networks as well as strategic

collaborations (for example with universities).

We invest in our employer brand: METRO has again been certified as a top employer.

Altogether, 8 METRO national subsidiaries and 2 service companies received the renowned

certification by the Top Employers Institute.

We have recently established an Employer Branding Academy, developed by a renowned

external partner, to train our HR staff in 20 METRO/MAKRO countries. We are also working on

establishing new technologies to increase our digital footprint and launch a smart recruitment

platform.

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Talent management and succession planning
Through comprehensive talent management, targeted succession planning and numerous career

development opportunities, we continuously develop our employees. This way, we offer them

attractive careers within our company, thus creating the basis for sustainable success. Our

remuneration and benefits models also provide incentives for our employees to work

performance-driven in line with our corporate Guiding Principles.

Our goal is to fill vacancies internally wherever possible. At the local management level we

are committed to filling 75% of all positions from internal ranks and locally. It is important to

identify our talent as early as possible and prepare them for future management tasks, both

nationally and internationally. The internal succession rate for national subsidiary management

members was 86% in financial year 2020/21.

Regarding externally recruited professionals and managers, we consider it highly important

that they are not only suitable for the position to be filled but also have the potential to develop

beyond that. Therefore, we look at the second and third management level and measure what

proportion of externally recruited employees is assessed as having medium or high development

potential after 2 years and is thus particularly considered for succession planning. During the

reporting period, this rate was 50% among the employees previously assessed in MPower. We

also pay increased attention to the proportion of women in management positions in our

succession planning.

Early identification and targeted development of internal talent is supported by the new

integrated Talent Management and Learning System being introduced across the group in 2021

in combination with new processes for assessing the performance and potential of all

employees. Currently, the learning module with its many new opportunities for personal

development is available to around 90,000 employees. Meanwhile, the performance and

succession planning module is already available to around 30,000 employees. A broader roll-out

is planned for the coming years. The previously separate processes of performance and potential

assessment as well as succession and individual development planning have been integrated into

a coherent approach in the revised version and are fully supported online. Managers play a

special role in the process, as they are responsible for assessing their own employees in a

differentiated manner and defining suitable development measures based on this assessment

and potential target positions. They are supported by the option to systematically collect

feedback on their employees’ performance from different stakeholders. They can also receive

integrated proposals for development plans based on the assessment. All employees also have

an opportunity to introduce their own development ambitions into the process in a structured

manner.

Individual evaluations and development measures as well as succession plans are coordinated

in an annual calibration process, which takes place both per country for all employees and

across countries for the first and second management levels. At the same time, decisions are

made to determine for which employee groups we will invest in talent or development

programmes at local or global levels. The talent programmes for younger employees focus on

retention and qualification to team leader or initial management positions. In addition to the

formal job appraisal process, the new talent management system includes a variety of ways to

encourage informal feedback between co-workers. It also promotes interaction on performance

and development between employees and managers to further emphasise the importance of

continuous learning and development.

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Performance-based remuneration
METRO employees receive competitive, performance-based and fair remuneration. We have also

anchored this in our global guideline on fair working conditions and social partnership. Our

remuneration system ‘Perform & Reward’ for executives (with the exception of the members of

the Management Board) comprises a monthly fixed salary as well as a variable annual

remuneration component, the payment amount of which essentially depends on the economic

development of the respective company in which the executive works. Additionally, the 1-year

variable remuneration considers our executives’ individual achievements, generation of

additional value for customers as well as their implementation of our Guiding Principles in their

daily work.

With a clear focus on the economic development of METRO, our managers also receive a

multi-year variable remuneration component that includes a sustainability component and allows

executives to participate in METRO’s share price development.

Executive remuneration is complemented by additional benefits, such as an attractive pension

model, promotion of health care and a mobility budget that can be used as part of METRO’s

‘Green Car Policy’ for a car, train rides or pension provision.

For more information about the remuneration of the Management Board, see chapter 6 Remuneration report
105 .

page

Career development and retention of talent
Numerous learning solutions are offered by the in-house training academy ‘House of Learning’,

which is CLIP-accredited by the renowned institution European Foundation for Management

Development. The goal is to support the individual development of employees and managers –

both at METRO AG and at the national subsidiaries – and to reinforce their loyalty to our

company. During the reporting period, a new uniform learning management system was

introduced to which all employees from all METRO companies have individual access. This user-

friendly system gives employees access to a wide range of (independent) learning opportunities

and makes it easy to manage mandatory instructions.

In the previous financial year, we introduced ‘Leading in the New Normal’, an online

programme for managers. In this financial year, we added the learning solution ‘Mastering Your

New Normal’ for employees without management responsibility. Both programmes support

employees and managers of the group and of METRO AG in dealing with the challenges of the

new work environment, which is distinguished by a higher proportion of digital, virtual and

hybrid ways of working.

Furthermore, the portfolio of international talent programmes, which are important for the

internal succession rate, was completed in the reporting period. We also managed to prepare

our highly talented employees in the company for the challenges of future management tasks

in the wholesale business – even in times of lockdown – and to ensure long-term succession

planning. Thus, all existing international talent programmes took place according to plan.

The programme ‘Next Generation Finance’ is tailored to the talent in our finance positions. It

pursues a threefold objective: (1) to prepare experts for their first leadership responsibility in

the finance world, (2) to increase their business expertise to distinguish finance departments

as business partners, and (3) to highlight changes in roles to prepare them for the future. ‘HR

Masterclass’ is aimed at HR professionals who support our employees along the employee

experience lifecycle, making METRO a very special place where people enjoy working and are

productive.

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Master in Store Operations prepares our store managers for their role as regional managers.

Through selected topic areas and international project work, they learn about the key factors

in a customer-oriented sales and service organisation.

In the purchasing organisation, the ‘Next Generation Offer’ programme was launched in

September. It prepares participants for senior roles in offer management by developing

functional know-how, international project work, customer-focused thinking and international

networking.

This offer is complemented by cross-functional talent programmes for various seniority levels:

The international management trainee programme METRO Potentials is aimed at career

starters and leads through various stations in the store and headquarters, both in Germany

and abroad. Participants master ambitious challenges during the 2-year programme and are

supported by mentors to assist in their development to become managers at METRO.

‘Future Leaders’ offers proficient experts, project managers and middle management the

prospect of advancing to the second management level and beyond.

‘Accelerate!’ is designed for our managers at the second management level with potential for

a role in national subsidiary management. Besides leadership topics, it also focuses on

strategy, implementation strength and digitalisation. Mentoring is provided by operating

partners, national subsidiary CEOs and group directors of METRO AG.

At the top of our international talent programmes is ‘Booster’ with the aspiration of coaching

our most promising members in the national subsidiary management teams to become

national subsidiary CEOs. Mentoring for this programme is provided by the Management

Board of METRO AG.

TRAINING COURSES AT METRO WHOLESALE

Participants

Participant hours

Individual learning (e.g. e-
learning, videos, materials)

Instructor-guided learning
(face-to-face and virtual
training)

465,772

270,147

169,462

525,501

Total

635,234

795,648

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TRAINING COURSES AT METRO AG

Participants

Participant hours

Individual learning (e.g. e-
learning, videos, materials)

Instructor-guided learning
(face-to-face and virtual
training)

2,496

1,329

1,353

3,303

Total

3,849

4,632

Diversity and inclusion
METRO strongly believes that diversity and inclusion lead to better business results. In order to

establish a diverse and inclusive corporate culture and to gain better access to more talent,

METRO has developed a company-wide diversity strategy. The goal is to create an open work

environment in which individual differences are respected, valued and promoted. In this way, the

course is set for a workforce, in which all employees can develop and use their unique potential

and strengths.

Equal opportunities in the workplace
Equal employment opportunities are promoted for all employees. METRO aims to further

increase the proportion of women in managerial positions. The objective is for 25% of employees

on the first management level below the Management Board and 40% of employees on the

second management level below the Management Board of METRO AG to be women by

September 2025. At the end of financial year 2020/21, a share of 18.8% of women were

employed in the first management level below the Management Board and 31.3% in the second

management level below the Management Board. Furthermore, we voluntarily set a target for

the share of women in executive positions at our wholesale business. According to this, the

share of women in management positions at levels 1 to 3 (including store management) of

METRO locations worldwide is to be 30% by September 2025. At the end of financial year 2020/

21, the percentage of women in management positions at levels 1 to 3 (including store managers)

is 25.2%. Additionally, the Supervisory Board has stipulated the objective of having at least one

female member appointed to the Management Board of METRO AG by June 2022. As of

1 November 2019, Andrea Euenheim was appointed to the Management Board of METRO AG as

the new Labour Director. METRO AG achieved the target set by the Supervisory Board already in

2019.

To support these goals, the Women Leadership Programme (WLP) was launched in 2018. It

supports the top 150 women within METRO with customised training measures. In addition, they

are offered the opportunity to contribute to solving relevant business challenges and thus to

make an impact and gain international visibility within METRO.

Another cornerstone of the diversity strategy is the commitment against discrimination of

people who identify as part of the LGBTIQ community and their inclusion in society and the

company. To this end, a global LGBTIQ strategy was developed in financial year 2020/21 and

external and internal communication support was provided in Germany and 7 other METRO
countries for both IDAHOBIT11 Day and PRIDE Month in June. Furthermore, an LGBTIQ awareness
training programme was conducted with regional management from the various countries. In the

external audit conducted by the UHLALA Group, METRO AG received the PRIDE Champion

employer seal gold status of the UHLALA Group.

In 2020, METRO established one contact person for diversity and inclusion in each METRO

(national subsidiary) company via a task force. This task force continues to monitor the

company-wide diversity and inclusion strategy with key figures.

11 International Day against Homophobia, Biphobia, Intersexphobia and Transphobia.

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METRO is a member of various initiatives such as the LEAD Network, BeyondGenderAgenda,

UHLALA’s ‘We Stay PRIDE’ programme and the PROUT AT WORK foundation as well as the

LGBTIQ Rhine-Ruhr network. Moreover, METRO has been a signatory of the Diversity Charter

since 2007. Beyond that, various employee networks have been established to represent the

issue of diversity and inclusion within the workforce and externally on their own initiative.

Occupational safety and health management
As a leading sustainable company, we are committed to ensuring a safe and healthy work

environment for our employees, suppliers and customers. To this end, we began the conversion

of our Occupational Health and Safety Management System in 2020, based on the principles of

ISO 45001. In financial year 2020/21, we also established a group-wide Operational Safety

Management System (OSMS) for METRO.

Occupational safety reporting
To continue and strengthen consistent occupational safety reporting, we continue to develop

our work-related injury management tool to align with METRO unit needs and our occupational

safety standards (language setting, additional forms, etc.).

KPIs for occupational safety and health
Safety is always a top priority for METRO. The operational safety strategy aims to raise

awareness among employees that each individual bears responsibility for occupational safety.

Furthermore, we are continuing to work on a transparent group-wide reporting system. The Lost

Time Injury Frequency Rate (LTIFR), that is, the total number of lost-time incidents (LTIs) per
1 million working hours, for the METRO companies in financial year 2020/21 was 7.0612 (2019/20:
6.7813 ). Apart from that, we carried out the first ‘Review of Operational Safety at METRO’ audit
in the current financial year. The objective of the audit was to review the implementation of the

Operational Safety Management System (OSMS) and to support the organisation in the

transition from traditional occupational safety to a more comprehensive approach to

occupational safety.

Occupational safety in times of Covid-19
The global Covid-19 pandemic has also affected METRO. Extensive organisational measures were

implemented to ensure the safety of all employees. They include optimisation of the flexible

work offer, travel restrictions as well as safety and hygiene measures in the headquarters, stores

and warehouse locations of the METRO companies. Transparent communication regarding

regulations and changes in the Covid-19 situation kept the incidence of infections at a low level

throughout the company.

Well-being

In addition to all occupational safety measures, we launched an initiative in financial year 2020/

21 to support keeping employees healthy. In the first phase, we adopted a framework which can

be used to record all activities that contribute to keeping employees healthy at METRO.

Depending on the topic, the activities are assigned to a category. We distinguish between the

categories of mental health, physical health and social health. Another category is financial

health: it includes all relief efforts that reduce financial stress factors, such as help with

managing finances in different phases of life and assistance in crises. The final category is

formed by all topics that tie in with the company’s purpose and support implementation of the

12 Excluding the national subsidiary in Japan.
13 This ratio has not been subjected to the limited assurance business audit under ISAE 3000 by auditing firm KPMG AG Wirtschaftsprüfungsgesellschaft.

Furthermore, the number excludes the national subsidiary in Japan.

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company’s values. Here we distinguish between basic, medium and mature in terms of the

maturity of the implementation of all initiatives.

In the next phase, the national subsidiaries are tasked with filling the framework with their

activities that are most relevant for their country and their employees. For example, METRO AG,

METRO Poland and MAKRO Spain offer telephone counselling for concerns and problems in the

professional and personal environment. Online training sessions on mindfulness and meditation

are offered in Germany, India and Turkey. These are good examples of mental health support. To

support physical health, METRO India and METRO DIGITAL, for example, offer online sports and

nutritional advice for their employees. Many initiatives are available to promote togetherness

and connectedness, that is, social health. Examples of welfare in relation to financial health

include appeals for donations to support victims of the flood disaster at METRO Germany.

In order to offer even more for the health maintenance of our employees in the future, we

nominated Well-being Champions all over the world. They are expected to further promote

initiatives for health maintenance in their sphere with the support of the HR department.

Fair working conditions and social partnership
Our principles on fair working conditions and social partnership are a crucial component in

shaping our employer–employee relations. These principles are based on the UN Guiding

Principles on Business and Human Rights, the core labour standards of the International Labour

Organization (ILO) as well as the 3 main principles of the Resolution on Forced Labour by the

Consumer Goods Forum. Accordingly, these principles contain the right to free unionisation and

collective agreements, structured working hours and wages, occupational safety and health

management as well as the prohibition of forced labour, child labour and discrimination.

We ensure that METRO and its national subsidiaries comply with the principles on fair

working conditions by reviewing our regional headquarters, stores and logistics centres. In order

to improve the working conditions in the national subsidiaries, corrective action plans are

defined with the local colleagues, in which substantive measures with clear responsibilities and

timetables are defined and executed. The focus is on entering into a dialogue with the

companies and promoting knowledge sharing in order to learn from one another, not only with

regard to working conditions but also in terms of dialogue with employee representatives. Since

financial year 2016/17, extensive reviews on compliance with the METRO principles have been

performed on-site in 15 national subsidiaries (Pakistan, Bulgaria, Japan, Hungary, Italy, Serbia,

India, Slovakia, Moldova, Spain, Russia, Croatia, Kazakhstan, Portugal and France). Many areas

returned satisfactory results, but also showed potential for improvement, in particular in the area

of occupational safety. In the area of occupational safety, a group-wide Operational Safety

Management System was implemented in the reporting period. The on-site reviews were

followed by comprehensive training on the METRO principles on fair working conditions. No on-

site audits were carried out during the reporting period.

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Since financial year 2019/20, we have changed our audit procedure in the METRO companies

due to Covid-19. Surveys on the principles on fair working conditions and social partnership

(FWC & SP) are conducted online. The goal is to assess the current implementation status of the

FWC & SP principles in key units and to make recommendations for improving the FWC & SP

process. In financial year 2020/21, we added FWC & SP to our Risk Governance Process.

On a national and international level, METRO maintains constant communication with works

councils and unions and encourages management to engage in constructive and mutually

informative dialogue with our employees and their representatives. This dialogue results in

several collective employment agreements at the level of business units, countries or individual

stores – depending on local laws and customary practices. There is also the METRO Euro Forum

(MEF), our European Works Council. This corporate body is notified and consulted in case of

cross-border/transnational changes within the EU area. The MEF meets regularly. Plenary

meetings are held once a year with a training session for all employee representatives of the

MEF and up to 3 times a year with the steering committee of the MEF and management

representatives. Due to the Covid-19 pandemic, these meetings were held virtually in financial

year 2020/21. Also, in a periodic social dialogue with the international trade union organisation

UNI Global at the global level, discussions include the commitment to fair working conditions

and social partnership.

Development of employee numbers
The tables below show the year-on-year development of employee numbers as an average for

the 4 quarters of the financial year and as of the closing date of 30 September, both based on

full-time equivalents:

DEVELOPMENT OF EMPLOYEE NUMBERS BY SEGMENT

Full-time equivalents, average

METRO

METRO Germany

METRO Western Europe (excl. Germany)

METRO Russia

METRO Eastern Europe (excl. Russia)

METRO Asia

Others

METRO AG

2019/20

2020/21

89,359

11,580

23,483

11,583

27,681

7,182

7,054

796

87,096

11,337

23,714

10,650

27,508

7,072

6,074

741

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DEVELOPMENT OF EMPLOYEE NUMBERS BY SEGMENT

Full-time equivalents as of the closing date of 30/9

METRO

METRO Germany

METRO Western Europe (excl. Germany)

METRO Russia

METRO Eastern Europe (excl. Russia)

METRO Asia

Others

METRO AG

Social matters

2020

88,306

11,396

23,594

11,280

27,484

7,079

6,705

768

2021

86,527

11,291

24,640

10,201

27,174

7,054

5,426

741

Respect for human rights
The principles of METRO include respect of human rights, as set out in the United Nations’

Universal Declaration of Human Rights, the International Bill of Human Rights, the OECD

Guidelines for Multinational Enterprises, the UN Guiding Principles on Business and Human

Rights and the Declaration on Fundamental Principles and Rights at Work of the International

Labour Organization (ILO). This is manifested in our Principles for Human Rights, which apply to
our own employees and to our business partners within our value chain14. Our goal is to identify
and prevent violations of human rights in our own business operations and in the supply chain.

We also strive to systematically improve working conditions in our supply chain.

An attitude aligned with similar values is also important to us on the part of our business

partners. We formalised this in the METRO Code of Conduct for business partners. It includes

compliance with human rights according to the International Bill of Human Rights, the OECD

Guidelines for Multinational Enterprises, UN and ILO standards, occupational and social matters

based on the principles of the International Labour Organization’s (ILO) 4 core labour standards,

provisions for environmental protection and corporate ethics, in particular anti-corruption and

anti-bribery, antitrust and competition laws as well as data protection. During the reporting

period, the technical conditions were created to define the Code of Conduct as a minimum

requirement and thus to integrate it as a mandatory document into the new METRO Supplier

Portal. Once the function is live, all suppliers who have a business relationship with METRO will

be prompted to read and agree to it. The national subsidiaries will successively be connected to

the new portal. The new function will be activated in financial year 2021/22, and thus more and

more suppliers will gradually be included. In addition, we have embedded the list of criteria for

our social standard process in the food own-brand manual of the purchasing company European

Food Sourcing (EFS). When the manual goes into effect on 1 October 2021, all requirements for

demonstrating human rights compliance will already be clarified when invitations to tender are

issued. The relevant documents and evidence must then be available for the listing. Furthermore,

all of our own-brand contracts and framework contracts for brand suppliers contain a social

standards clause that gives us legal means to enforce our requirements.

In case of violations of our basic human rights principles, our employees can contact their

supervisors or the company’s compliance officers. Using a tool that is publicly accessible via the

METRO compliance page, internal and external individuals, including stakeholders of our

14 For the METRO AG holding company, the aspect of human rights in the supply chain is not essential because of its business orientation, but rather only in relation

to its own employees.

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suppliers, can report incidents and violations. It is important for us that our suppliers also

provide such a reporting system. Reported incidents affecting our company will be promptly

investigated and processed by our experts to take appropriate action, if necessary. We are also

committed to working with our suppliers and within the group to remedy the effects of the

grievances, utilising joint initiatives and collaborating with stakeholders, and not obstructing

access to other legal remedies.

Global labour and social standards in the supply chain
In preparation for the requirements from the German Act on Corporate Due Diligence

Obligations in Supply Chains published in July 2021 and in order to contribute to ensuring

socially acceptable working conditions within our procurement channels and to prevent

potential infringements, the application of social standard systems is a key part of the

purchasing process in addition to the contractual manifestation of our requirements. We are

aiming to have our producers audited in accordance with the supply chain management

standard set out by the amfori BSCI, the Sedex audit according to SMETA or an equivalent social

standards system. In line with our risk approach, this applies to all producers of certain typically

human rights-critical food categories and industries, and to all producers in defined risk

countries (based on the amfori BSCI assessment) in which METRO SOURCING International

(MSI) and METRO Food Sourcing (MFS) have imported goods manufactured. It also applies to all

above referenced producer which ressresent a risk exposure and who manufacture own brands

or own imports for METRO. This risk assessment did not have to be adjusted in connection with

the Covid-19 pandemic either, as it is universally applicable. For many years now, we have been
working on the basis of a corresponding process for our non-food producers15. Since 1 June 2019,
the same process was established analogously for all food and near-food producers in the own-

brand sector. To date, MFS has fully implemented the process. The national subsidiaries in

Turkey, Pakistan and Germany as well as our purchasing company Rotterdam Trading Office

(RTO) have introduced the first producers to the process. Other purchasing companies and

national subsidiaries have started to implement it. Our goal is to include our entire supply chain

in this process by 2030, insofar as it is considered as representing a risk in terms of potential

human rights violations. The national subsidiaries will be trained and successively integrated into

the programme. Due to the disruptive circumstances of the Covid-19 pandemic, particularly with

regard to supply chain management, significantly fewer regular on-site audits took place

throughout the reporting period. Under normal circumstances, we have them regularly carried

out by external auditors in accordance with the audit cycles of the social standards accepted by

METRO. Instead, we carried out virtual audits or reviews of written documents, so that

compliance with the requirements was checked in at least some cases. As a result of these

circumstances, we have temporarily discontinued the suspension of suppliers due to expired

audits from mid-March 2020 to mid-October 2021.

15 This includes merchandise producers (non-food own-brand products and own non-food imports) in high-risk countries that carry out the final value-creating

production step, for example produce the final item of clothing.

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In light of this fact, we particularly consider responsible sourcing practices as the key to

strengthening business relationships, ensuring business continuity and protecting human rights

in global value chains.

As of 30 September 2021, 569 of 717 active own-brand non-food producers and 58 of 165

corresponding food/near-food producers had undergone the audit process. Within this group,

100% (569) of non-food producers and 98% (57) of food/near-food producers have passed the

audit successfully. Effective 1 January 2019, non-food producers who fail the audit can only be

commissioned as METRO contracting parties if they achieve an acceptable audit result. In other

words, they have to receive an A, B or C for the amfori BSCI assessment or successfully pass an
audit that is acknowledged as equivalent16. Until further notice, all food/near-food suppliers with
amfori BSCI D (and in exceptional cases also E) audit results (and corresponding equivalents of

other standards recognised by METRO) also qualify to be commissioned by METRO. This

procedure realistically reflects the challenging way of re-integrating suppliers into the process

and successively working towards ensuring socially acceptable (working) conditions.

The verification of compliance with our requirements is performed via an internal IT-based

process management database, which provides an overview of the portfolio management of the

affected suppliers and the associated producers. The database is also used to monitor

compliance with contractual agreements during the initiation and suspension of business

relationships. Misconduct with regard to the deal-breakers specified by METRO in the course of

ongoing business relations will trigger suspension of the supplier. Deal-breakers include specific

findings in the areas of child labour, forced labour, occupational safety hazards with regard to

fire safety and ethical behaviour. If misconduct is discovered at suppliers and their producers

concerning one of these areas, they are required by METRO to develop short-term and long-

term solutions to remedy the deal-breaker issue. New orders or follow-up orders are suspended

until the findings in the deal-breaker process have been resolved.

In order to contribute to the improvement of the social requirements in our production plants

and thus to further increase the proportion of valid social audits, MSI, MFS and METRO Turkey

work together with our local producers and support them with training courses that serve to

teach understanding and compliance with the social standards. By training our suppliers on

aspects of hygiene and the implementation of fair labour practices, we are raising their

awareness, particularly on issues that became important with the outbreak of the Covid-19

pandemic. This way, we are making up for largely cancelled amfori BSCI and Sedex audits, thus

fulfilling our due diligence obligation to give weight to respect for human rights. Special

attention was paid to stricter hygiene rules and potential human rights violations as a

consequence of the sometimes severe economic losses, such as the risk of unregulated overtime.

MSI also conducted an initial survey with approximately 1,000 of its suppliers in July and August
2021 specifically on the topic of living wages17. Next, we will implement training sessions
focusing on this topic as well.

In addition to the focus on social issues, MSI has started to audit its producers with a self-

assessment questionnaire on environmental compliance in financial year 2020/21.

With regard to the description of risks associated with non-compliance of standards by our suppliers, we refer to the
page 100 in chapter 5 Opportunities and risk report. We did not
section on ‘Suppliers and products – quality risks’
identify any significant risks.

16 A METRO company was granted an exemption in August 2020 for the (post-) coronavirus period to continue to use individual producers with D audit results if

their D audit results are attributable to coronavirus-based failure. These producers will be granted a 6-month grace period after audits resume in September 2021
to demonstrate a follow-up audit result of A to C. No use was made of the exemption during the reporting period.

17 Measurement according to the so-called Anker methodology; data taken from the database of the Global Living Wage Coalition and partly based on the

information from the relevant amfori BSCI audits of the producers.

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Corporate ethics and transparency
The Management Board of METRO AG is committed to responsible corporate conduct, for

example with regard to our tax strategy; therefore, we consider it important to comply with

regulations and laws and to conduct ourselves with integrity and ethics at all times. METRO sees

corporate responsibility and integrity as a key element of a sustainable business model.

With regard to our customers, this commitment is primarily reflected in the sensitive handling

of customer data in accordance with our claim to protect personal data as well as in responsible

marketing. Our self-image is characterised by compliance with product labelling regulations as

well as transparent, clear, honest and correct information about our products. It allows us to

reinforce our customers’ trust in our company. We want to help customers make informed

purchasing decisions. Through customer surveys, we also include their needs in our marketing

topics and thus contribute to transparent communication. We maintain a close dialogue with our

brand suppliers as well as advertising and media agencies with regard to ethical conduct in

terms of brand protection. This way, we can ensure that our suppliers and thus our brand do not

appear in an ethically critical context. Furthermore, our business partners and consultants are

committed to brand protection due to contractual agreements.

The lawful and careful handling of intellectual property is also a substantial part of our

business ethics. The intellectual property protection strategy comprises a bundle of legal,

organisational and technical measures. They ensure that METRO’s intellectual property and

confidential information are protected and that existing property rights of third parties are not

infringed.

The strategic cornerstone of responsible corporate action is the compliance management

system, which is overseen by the Management Board of METRO AG as an indispensable element

of good corporate governance. It provides a structure for permanent avoidance, detection and

sanctioning of violations in the main risk areas and is part of the governance, risk and

compliance system (GRC system) alongside the risk management system, the internal control

system and Internal Audit. The group’s Governance, Risk and Compliance Committee (GRCC) is

chaired by the Chief Financial Officer of METRO AG and regularly discusses methods and further

developments of the GRC subsystems. The GRC Committee also reports to and strategically

involves the Management Board of METRO AG at least every 6 months.

Compliance – including the fight against corruption and bribery as well as antitrust violations
With a group-wide compliance management system (CMS), METRO bundles measures to ensure

compliance with laws and a self-imposed code of conduct, including key risks such as combating

corruption and bribery as well as antitrust violations. The aim of the CMS is to systematically and

permanently prevent, otherwise detect and sanction violations within the company and to take

measures to achieve future compliance.

The METRO Business Principles are at the heart of our compliance initiatives and are firmly

anchored throughout the group particularly by ongoing training measures. The CMS is based on

the METRO Business Principles. Business Principle no. 2, for example, explicitly prohibits

corruption and bribery in dealing with business partners and authorities. Business Principle no. 5

clarifies that the rules of fair competition must be respected. When setting up the CMS, METRO

was guided by the basic elements of such a system described in the IDW PS 980 auditing

standard (Principles for the Proper Performance of Reasonable Assurance Engagements

Relating to Compliance Management Systems). It operationalises the 7 CMS elements on a risk

basis applying a wealth of organisational, structural, procedural and individual measures for all

major group companies.

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The Management Board of METRO AG and the management of the relevant METRO group

companies demonstrate proper conduct. In addition to informal role model behaviour, frequent

‘tone from the top’ messages are standard in the organisations. New members of management

committees and other executives undergo compliance onboarding at the beginning of their

activity. Indications of compliance incidents are investigated in a clearly defined and objective

process. It involves all relevant functions including compliance, legal, audit and HR.

The defined goal of the CMS is additionally implemented in the organisation via human

resources management tools. As part of the regular performance reviews, compliance aspects

from the METRO Guiding Principles are included in the evaluation.

Generally, the CMS compliance risks control is risk-based. As part of regular risk audits, for

example in the form of workshops with relevant stakeholders in the respective units, the

compliance risks are continuously checked for completeness and relevance. In addition, each

relevant group unit is classified in 1 of 3 risk classes. External and internal indicators are used for

this purpose, such as Transparency International’s indices, number of employees and compliance

maturity in past periods.

A compliance programme with different intensities is defined for each risk class. It is based on

the guidelines developed for each significant compliance risk and adopted by the Management

Board. When it comes to combating corruption and bribery, these are guidelines for dealing with

business partners, public officials and external consultants, including guidelines for a business

partner assessment. With regard to avoiding antitrust violations, this is an antitrust guideline,

which includes guidelines for conduct in the context of association activities and other

encounters with competitors.

The CMS is implemented by the compliance organisation. A compliance officer has been

appointed to each relevant METRO group company for this purpose, who reports directly to the

METRO AG Corporate Compliance department as part of Corporate Legal Affairs & Compliance.

Corporate Compliance keeps the concept and content of the CMS on a risk-appropriate level

and provides the concepts and tools for implementation in the METRO companies of each CMS

element. The disciplinary and technical leadership of the compliance officers takes place via

institutionalised reporting dates as well as target agreements. The compliance officers regularly

report directly to the local management in their units. Moreover, identified key compliance risks

are addressed in the context of the other GRC subsystems and tracked in the systems there.

An IT-based whistle-blower system provides employees and external third parties with an

opportunity to provide information (under the protection of anonymity, if preferred) on

regulatory infringements within the company. All reported regulatory infringements, irrespective

of whether the measures for ensuring compliance with these rules fall within the area of

responsibility of the compliance organisation, are investigated and – where appropriate and

necessary – sanctioned systematically by the CMS, which relies on the compliance incident

handling system operated by the compliance organisation.

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Compliance topics and measures are systematically communicated to the workforce through

a variety of channels in the company in a targeted manner. A core tool is compulsory

compliance training, which is either carried out in person or through e-training. In financial year

2020/21, compliance training was executed in all relevant METRO companies. The selection of

relevant employee groups is risk-based. Practical content is taught in the training courses. A

variety of other communication formats are used in addition to training, such as compliance

talks, posters, flyers, intranet, department visits, function and leadership conferences as well as

personnel development events.

The METRO companies collaborate with a large number of external business partners. Before

entering into contractual relationships, a risk-based examination is performed to determine

whether there are reasons from a compliance perspective not to engage a third party. Certain

groups of business partners, such as consultants with contact to public officials as part of the

order fulfilment, require an in-depth audit that is appropriate for the risk. A digital tool for

compliance auditing of business partners has been implemented in all relevant group companies

for this purpose. The audit approach is risk-based and the audit can be carried out in various

degrees of intensity, for example in the form of self-disclosure or by using external databases

with relevant risk information.

Proper implementation of the defined risk-based measures for the implementation of the

CMS is ensured through frequent KPI reporting for each relevant METRO group company. Based

on KPI reporting, a compliance maturity level is determined annually, which in turn is

incorporated into risk classification and definition of measures. The efficacy of our internal

compliance controls is regularly assessed by our Internal Audit unit. As part of METRO’s GRC

approach, the Group Audit department evaluates the effectiveness of the group-wide CMS every

year. This assessment is presented to the Management Board and the Supervisory Board as part

of the regular reporting on compliance issues.

Overall, the mentioned control and monitoring measures demonstrate an appropriate level of

compliance maturity.

Taxes
As an internationally operating company, METRO is subject to taxation in numerous countries.

METRO is aware of its responsibility to make tax payments in all countries in accordance with

regulatory obligations. This responsibility is reflected by the group tax guidelines adopted by

the Management Board of METRO AG and processes based on them for compliance with the

applicable laws and regulatory provisions as well as in cooperative and fair collaboration with

the tax authorities. The guidelines are binding throughout the group. They explain and regulate

the responsibility of the companies as part of METRO’s tax obligations.

METRO AG has implemented a tax compliance management system (TCMS) that has been

certified to be adequate for sales tax in Germany and for sales tax abroad. We aspire to add

certification of the TCMS for other significant tax types.

The TCMS is part of the GRC system of METRO AG.

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Protection of personal data
The protection of personal data of customers, employees and business partners is a high priority

for METRO. This is particularly true considering the fact that corporate processes are

increasingly being digitalised, requiring data collection, processing and storage.

METRO always undertakes to comply with the respective data protection laws of the

countries in which METRO is active. In addition, METRO has a group-wide data protection policy

that contains uniform standards for the handling of personal data and is binding for all group

companies. In addition, national laws apply. For companies operating in Europe, this includes, in

particular, provisions for dealing with the General Data Protection Regulation (GDPR).

METRO also has a group-wide data protection organisation, consisting of local data

protection officers and data protection managers responsible for corporate data protection. It

facilitates the pursuit of overarching and national data protection and digitalisation

developments in order to continue to meet the statutory data protection requirements across

the group.

With the help of the structures created by the data protection organisation, METRO has set

up a system for continuously and comprehensively monitoring compliance with data protection

regulations within the group. The review covers internal requirements and provisions from laws

and other legally binding provisions on data protection.

The pandemic gave rise to new requirements for processing of personal data, in particular to

ensure the safety of customers and employees and to implement legal requirements. During

implementation, the applicable data protection requirements were taken into account and

special care was taken to collect only absolutely necessary data, especially with regard to health

data (for example vaccination status/infection status).

Customers
METRO is focused on identifying and addressing current and future challenges of its customers

in a constantly changing environment at an early stage and providing them with the best

possible support to overcome them. In doing so, we strive not only to meet our customers’

expectations, but also to position METRO as their preferred partner. During the reporting period,

the Covid-19 pandemic clearly demonstrated to society, and thus also to companies like METRO,

how important robust and sustainable supply chains are. It also revealed how strong the interest

in more conscious consumption is among consumers, for example in terms of local sourcing,

healthy products and more sustainable packaging options. It is also against this background that

our customer relationships are evolving from transactional merchandise trading to sustainable

and holistic partnerships.

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Responsible procurement and a more sustainable product range
Our assortment – especially that of our own brands – is a strong lever to achieve a positive

impact in terms of more sustainable consumption. In a continuous transformation process, we

are expanding our assortment of sustainable, local and healthy products for our customers to

meet their expectations. At the same time, we help them differentiate themselves from

competitors, strengthen local economies and influence our supply chains by raising our ambition
to meet environmental and social standards18. We are committed to collective action that
strengthens systemic approaches, for example to address excessive deforestation, forest

degradation and conversion in key commodity supply chains, by working with external partners

such as the Consumer Goods Forum’s Forest Positive Coalition (FPC) of Action. This

collaboration also helps us manage risks, for example, by avoiding sourcing raw materials from

areas considered high risk in terms of excessive deforestation. Once a region is classified as a

‘risk area’, we work on the ground with local parties and other stakeholders in the supply chain,

for example, to end excessive deforestation. We are also reinforcing our existing compliance and

control mechanisms to ensure that products are traceable and certified in line with our

purchasing requirements.

We systematically establish group-wide requirements to provide the relevant internal and

external parties with guidelines for sustainable supply chain and procurement management –

from responsible sourcing strategies to building a more sustainable assortment. Therefore,

METRO works in line with its sustainable procurement policy, which describes the overall

approach, as well as with merchandise-specific policies, for example for fish, soya, palm oil,

paper and wood. Each policy contains corresponding targets, such as ensuring that 90% of the

12 main fish and seafood species in own-brand products are sustainably sourced by 2025, which

must be demonstrated in the form of a sustainability certificate or a development project.

During the reporting period, new policies on meat and animal welfare were enforced across the

group. The guidelines on disposable plastic and cage-free eggs, our health and nutrition

guideline and METRO’s packaging targets were updated.

The guidelines are developed jointly and cross-functionally by experts from the CR team at

METRO AG, departments (for example Quality Assurance and Procurement), as well as experts

from the METRO national subsidiaries and external experts through stakeholder involvement.

Our approach to responsible sourcing and a more sustainable product assortment, including all

related policies and targets, is approved by the METRO Sustainability Committee and published

on the METRO AG website. Quarterly progress updates are provided to the Sustainability

Committee to guide implementation by METRO’s operational functions.

18 For the METRO AG holding company, the aspects of responsible procurement and more sustainable product assortment, packaging and plastics as well as

healthy and nutritious products are not material according to § 289c of the German Commercial Code (HGB) due to its business orientation, but rather only for its
operating units.

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During the reporting period, 15 raw material-specific policy and reporting training sessions
with 1,47119 participants were conducted throughout the METRO organisation in order to once
again consolidate the implementation specifications of all policies group-wide and to

correspondingly introduce them to new colleagues. Through process optimisations, EFS also

revised its Food Common Sourcing Brand Book and integrated sustainable sourcing

requirements that include environmental, social and packaging aspects and will be the basis of

the tendering process for suppliers of own-brand products. The revised version of the Brand

Book took effect on 1 October 2021. While the packaging requirements are set out in a separate

packaging requirements profile, a new sustainability requirements profile for the tender process

was also developed for all other own-brand suppliers beyond EFS suppliers during the reporting

period. The profile takes into account environmental sustainability aspects of our procurement
policy20. In order to facilitate better data and target management, METRO further improved its IT
system landscape during the reporting period: for example, MQuality, a tool used throughout the

group for the development and monitoring of own-brand products with an initial focus on
quality management aspects, was expanded to include sustainability requirements21 such as the
ability to record sustainability certificates.

Healthy and nutritious products
As part of METRO’s overall strategy to offer more sustainable products, the goal is to enable

customers to make a positive environmental impact and healthy food choices for their

businesses and families by offering more reformulated, ultra-fresh, organic and alternative

protein products. In doing so, we strive to meet the expectations of our customers and

incorporate the insights gained from stakeholder communication and market research on

consumer demands for healthy food. The focus is on our own-brand products. Clear and easily

accessible information about nutrients and ingredients on the product, in the store or on the

national subsidiary’s website is of paramount importance to educate our customers about

healthy alternatives and thus promote healthy and more sustainable consumption. This

development experienced strong momentum, especially during the Covid-19 pandemic.

As outlined in our Health and Nutrition Policy, our goal is to offer our customers a total of

1,500 healthier own-brand products worldwide (150 from central sourcing and 1,350 from

national subsidiaries) by the end of 2023; some will contain less sugar, salt and fat, and some will

be additive-free and certified organic or based on alternative proteins. Special health and

nutrition ambassadors have been appointed in all national subsidiaries to support achievement

of these goals. Since 2018 and until the end of financial year 2020/21, 603 METRO own-brand

products have been reformulated in terms of their sugar, salt and fat content and to make sure

they are free of additives. Furthermore, 430 organic own-brand products and 14 alternative

protein-based products have been introduced since 2018.

Packaging and plastics
We support the recovery of resources through recycling to mitigate the risk of future depletion

of natural resources and loss of biodiversity. Therefore, especially for our own-brand packaging,

we strive to reduce the environmental impact throughout a product’s life cycle, including by

seeking alternatives to traditional plastics. Given the complexity of the challenge of reducing the

amount of plastic used and defining sustainable materials, we work with various stakeholders to

develop innovative solutions that promote closing loops and using less environmentally harmful

materials.

19 It was possible for individuals to participate multiple times.
20 It includes fish and seafood, palm oil, soya, cage-free eggs, paper and wood, and disposable plastics, but excludes meat and animal welfare, health and nutrition,

packaging, and social compliance.

21 It includes fish and seafood, palm oil, soya, cage-free eggs, paper and wood, and disposable plastics, but excludes meat and animal welfare and social

compliance. There is a separate section within MQuality for packaging; a separate section for health and nutrition information is in preparation.

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METRO has set goals to be completed by 30 September 2023:

to keep all own-brand packaging 100% free of PVC (PVdC) and EPS at all packaging levels,

to certify all primary and secondary packaging made of paper/cardboard/wood of our own

brands as defined by FSC or PEFC or to ensure a recycling proportion of at least 70%, and

to reduce plastic packaging (new and recycled) by a total of 2,000 tonnes, starting in 2018.

An expert team of packaging specialists from METRO AG and – since 2018 – a project team from

18 national subsidiaries and 3 trading offices are collaborating to achieve these goals. In the

reporting period, METRO Pakistan joined the project team as an additional member.

Furthermore, METRO has committed to replacing conventional disposable plastic products

with reusable, recyclable or compostable alternatives by the end of 2025. To this end, we joined

the Ellen MacArthur Foundation’s New Plastics Economy in October 2018. The foundation is an

international network of more than 290 organisations, companies, universities, academics and

financial institutions working together towards the cross-sector challenge of creating a closed-

loop economy for plastics.

In addition, METRO has launched the METRO Plastic Initiative together with the social

enterprise Plastic Bank and numerous own-brand and brand suppliers. In order to reduce the

consumption of valuable resources and to put the closed-loop economy principle into practice,

the initiative aims to raise awareness of sustainable packaging, promote sustainable

consumption as well as environmentally friendly recycling. The goal in the first 12 months of this

multi-year partnership is to collect more than 65 million plastic bottles before they potentially

end up in the world’s oceans. This is equivalent to more than 1 million kg of plastic waste. By the

end of the reporting period, more than 20 million plastic bottles had already been collected by

METRO and its suppliers.

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3 ECONOMIC REPORT

3.1 Macroeconomic and sector-specific parameters

The following description must always be considered explicitly in the context of the ongoing

Covid-19 pandemic. The underlying data were collected up to the closing date of 2 November

2021.

Global economy
The global economy was impacted by the ongoing pandemic in financial year 2020/21. Another

wave of infection spread in the first quarter. As a result, restrictive countermeasures with

negative consequences for social and economic life were (re)introduced in many countries. The

first vaccination programmes were also rolled out in this period. As vaccination rates progressed,

the restrictions were partially or even broadly lifted in the course of the year. The effects of viral

mutations, such as the Delta variant, remained largely within manageable limits. Overall, most

economies had not yet returned to their pre-pandemic performance levels by the end of the

financial year.

This development is reflected in the key economic figures: with 4.3% real global economic

growth, there was a clear upswing in financial year 2020/21 after the restrictions were gradually

lifted. Extensive economic stimulus programmes and labour market measures supported the

development. However, economic output was not at the level that could have been achieved if

the pandemic had been completely overcome. This is especially true for Western European

countries in the METRO portfolio. In the course of the financial year, inflation increased more

strongly than in previous years. Food and hygiene expenses, logistics costs and shortages of raw

materials contributed to this development.

Economic sectors that were particularly affected by the pandemic, such as tourism and

hospitality as well as sports and cultural events, recovered late in the financial year. As

restrictions were increasingly eased, a sustained positive trend set in. Food wholesalers also

benefited from this upswing.

Germany
At the beginning of Q1 2020/21, the German economy faced a renewed wave of infections. This

and the resulting far-reaching countermeasures had a significant economic impact into H2

2020/21. As the vaccination rate increased and the number of infections fell, the

countermeasures were eased or ended. An economic recovery became visible in all relevant key

figures, such as higher private consumption, an increase in imports and exports of goods and

services, and an unemployment rate below 6%. Economic stimulus and labour market measures,

some of which were substantial, contributed to the recovery. The inflation rate increased

significantly to around 3.8% in the past financial year, which was also attributable to expenditure

on food. Among other things, this development was driven by the end of the temporary VAT cut

and the shortage of supplies of important raw materials and production materials. Overall, the

real economic growth for the reporting period was around 1.3%. Potential negative

consequences of Brexit for German economic output were not yet fully apparent due to the

simultaneous effects of the pandemic.

The hospitality industry and the event and tourism industry were severely impacted by the

pandemic. However, a rapid recovery set in after restrictions were eased and partially lifted in

the second half of the year. In Q3 and Q4 2020/21, sales were already above those of the

previous year, but still below pre-pandemic levels. Food wholesalers also benefited from this

development.

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Western Europe
In the Western European countries, the number of infections rose again at the beginning of the

financial year. This increase was initially met with the (re)introduction of governmental

countermeasures; however, they were quickly relaxed again as the vaccination rate progressed in

the course of the financial year. The national economies of the METRO countries in Western

Europe grew by 2.7% in real terms in financial year 2020/21, but generally still lagged behind the

pre-pandemic level. This is particularly obvious in the large, tourism-driven countries: in Spain,

economic growth was 2% in financial year 2020/21 (2019/20: −8.2%), in France 4% (2019/20:

−6.7%) and in Italy 2.7% (2019/20: −7.3%).

The economic development has been similar in the Western European countries: a renewed

economic slump in Q1 2020/21 was followed by a clear upward trend, evident in the relevant

economic indicators. Private consumption as well as imports and exports increased, while the

unemployment rate remained relatively stable – but at a comparatively higher level in Spain and

Italy. Only the production of goods was slowed down by global supply shortages of raw

materials and production materials. As a result, inflation increased quite significantly in the

Western European countries, among other things also due to increased food prices. The

hospitality industry developed positively from Q3 onwards compared to the previous year, but

remained below pre-pandemic levels.

Russia
The Russian economy grew by 3% in real terms in financial year 2020/21. The restrictions

introduced as a response to the pandemic were less severe than in Western Europe despite

comparable infection figures and lower vaccination rates. Private consumption as well as imports

and exports developed very positively from H2 2020/21. Raw material extraction and

construction, driven by government subsidies, contributed significantly to growth. Oil

production was relatively lower due to decisions regarding production restrictions by the OPEC+

countries. The unemployment rate remained at a low level below 6% and inflation increased

significantly.

The impact of the economic development on the Traders sector was mixed. The traditional

and independent small grocery stores recorded a decline in sales that was roughly on a par with

previous years. By contrast, modern small-format food retailers benefited both during the

restriction phase and afterwards. The modern small-format grocery shops also include those

operated by METRO’s franchisees under the Fasol brand. Since Q2 2020/21, domestic

consumption in the hospitality sector also developed positively and in nominal terms was around

pre-pandemic levels in Q4 2020/21.

Eastern Europe
The other Eastern European countries also experienced an increase in infections at the

beginning of the financial year followed by recovery in the further course. The approximately

4.3% economic growth compared to the previous year reflects the positive development of

private consumption, imports and exports as well as industrial production. The labour market

remained stable, even though the inflation rate increased significantly. In Turkey, economic

restrictions were lifted completely during the financial year, resulting in a significant growth

stimulus, although the exchange rate remained weak and inflation was very high.

Tourist-driven countries such as Croatia and Turkey also reported increasingly positive

hospitality sales, although not quite yet at pre-pandemic levels. Food retail sales, adjusted for

inflation, remained at about the same level as the previous year and well above pre-pandemic

levels.

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Asia
The impact of the pandemic was somewhat delayed in the Asian countries of the METRO

portfolio, with China being the positive exception. A recovery of the healthcare systems after the

wave of infections in the winter of 2020/21 was followed by a resurgence of infections, mainly

due to the new Delta variant. This led to particularly high infection figures in India, exacerbated

by low vaccination rates –, a development that continued until the end of the reporting period.

The economy in Asia grew by 6.9% in real terms compared to the previous financial year, mainly

driven by the development in China (+8.9%). In India, the economy initially also recovered

strongly after the first lockdown in winter 2020, but then collapsed again in April due to a rise in

infection figures in Q3 2020/21. The other Asian countries were on a (moderate) growth path.

Private consumer spending still performed very well in Q1 2020/21, but declined or stagnated

during the rest of the financial year. The unemployment rate and inflation remained stable in

most countries. Industrial production also exhibited a positive trend.

The hospitality industry experienced a positive development across all countries and was

even above pre-pandemic levels in nominal terms (with the exception of Japan). On the other

hand, food retailing has seen heterogeneous development across countries. In general, sales in

the sector declined somewhat compared to the previous year and in some cases remained

slightly below the pre-pandemic level.

DEVELOPMENT OF GROSS DOMESTIC PRODUCT IN IMPORTANT WORLD REGIONS AND GERMANY

Change in % compared to the previous year

World

Germany

Western Europe (excl. Germany)

Russia

Eastern Europe (excl. Russia)

Asia

2019/201

2020/212

−2.3

−4.0

−6.5

−1.7

−1.2

−1.1

4.3

1.3

2.7

3.0

4.3

6.9

Real GDP growth based on USD and adjusted for purchasing power – except for ‘World’. The values are based on the financial year. Source: Oxford Economics.

1 The previous year’s figures may slightly deviate from the Annual Report 2019/20, since retrospective corrections are being made by the data provider.

2 Outlook.

3.2 Asset, financial and earnings position

Overall statement by the Management Board of METRO AG on the business development and
situation of METRO
Financial year 2020/21 was particularly dominated by the Covid-19 pandemic and the associated

government measures. They had a negative impact on the business development, especially in

the first half of the year. In the course of the second half of the year, government measures were

eased, resulting in a trend reversal and a significantly improved business performance. The

recovery in HoReCa demand that started during Q3 2020/21 continued in Q4 2020/21. With its

multichannel approach (wholesale stores, delivery business, digital offerings), METRO was able

to benefit disproportionately from this upswing. Sales have remained above pre-pandemic levels

since June, supported by market share gains in the core business and a clearly positive

development in Western Europe (excluding Germany), Eastern Europe (excluding Russia) and

Russia.

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The Management Board looks back on a volatile, but overall stable financial year. In a

challenging environment, the business model has proven to have a clear advantage, and the

targeted investments in market share gains as well as service and product quality have paid off.

Sales and adjusted EBITDA developed at the upper end of the adjusted outlook. Accordingly,

the Management Board is overall satisfied with the development of the business considering the

current circumstances. The reported earnings per share (EPS) from continuing operations are

€−0.15 (2019/20: €−0.40 for continuing operations). In line with METRO’s dividend policy

(payout ratio of 45% to 55% of EPS), there are no planned dividend distributions in financial year

2020/21 for ordinary shares or preference shares. Last year, the Management Board and the

Supervisory Board had proposed a dividend of €0.70 to the Annual General Meeting despite a

negative EPS in the continuing operations, since the reported EPS including discontinued

operations amounted to €1.27 due to the positive transaction proceeds (sale of majority stake in

METRO China and the Real hypermarket business). Since no significant transaction proceeds

were received this year and the ongoing Covid-19 pandemic continues to cause uncertainties,

the Management Board and the Supervisory Board consider this proposal appropriate.

Financial and asset position

Financial management

Principles and objectives of financial activities
METRO AG centrally performs the management of the group’s financing activities. It ensures

solvency of the group at all times, reduces financial risks where economically feasible and grants

loans to group companies. The objective is to cover the financing requirements of the group

companies cost-effectively and in sufficient amounts via the international banking and capital

markets. The financial activities are based on a financial budget for the group, which covers all

relevant companies. The selection of financial products is generally based on the maturities of

the underlying transactions.

Through intra-group cash pooling, financial resources can be allocated as needed by group

companies with financing needs using the liquidity surpluses of other group companies. This

reduces the financing volume and thus the interest expense.

METRO’s current long-term investment grade rating of BBB– and short-term rating of A‑3

(Standard & Poor’s) support access to the international financial and capital markets, which is

particularly utilised within the scope of the Euro Commercial Paper Programme and the ongoing

capital market bond programme as needed. Regular dialogue with credit investors and analysts

takes place.

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The following principles apply to all group-wide financial activities:

Central management of financing activities by METRO AG

External presentation of METRO as a single financial unit

Cost-effective capital procurement by using banking and capital markets

Diversification of dependency relationships with individual banks by limiting the credit

volume per bank

Separation of duties for initiation, controlling and management of financial transactions

Central financial risk management

For more information about the risks stemming from financial instruments and hedging relationships, see the notes
to the consolidated financial statements in no. 43 – Management of financial risks

page 238 .

Rating
METRO AG has instructed Standard & Poor’s to assess and monitor its credit rating, which is

presented as follows:

Category

Long-term

Short-term

Outlook

2021

BBB−

A-3

negative

Financing measures
The company’s medium-term and long-term financing needs are covered by a bond issuance

programme with a maximum volume of €5 billion. As of 30 September 2021, the utilised bond

issuance programme amounted to a total of €1,776 million.

Short-term financing requirements are covered through the Euro Commercial Paper

Programme with a maximum volume of €2 billion. On average, the programme was used at

€376 million during the reporting period. As of 30 September 2021, the utilisation amounted to

€26 million (30/9/2020: €295 million). Furthermore, bilateral credit facilities totalling

€102 million were drawn down.

As a cash reserve, METRO AG concluded a syndicated credit facility of €850 million and

additional multi-year bilateral credit facilities of €695 million. There was no drawdown during the

reporting period.

For more information about financing programmes and credit facilities, see the notes to the consolidated financial
statements in no. 35 – Financial liabilities

page 219 .

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UNDRAWN CREDIT FACILITIES BY METRO

30/9/2020

30/9/2021

Remaining term

€ million

Bilateral credit facilities

Utilisation

Undrawn bilateral credit facilities

Syndicated credit facilities

Utilisation

Undrawn syndicated credit facilities

Total credit facilities

Total utilisation

Total undrawn credit facilities

2,000

Total

up to 1 year

over 1 year

400

−150

250

1,750

2,150

−150

−86

900

986

−86

900

314

−64

250

850

1,164

−64

1,100

Total

797

−102

695

850

1,647

−102

1,545

up to
1 year

−78

over 1 year

718

−23

695

850

1,568

−23

1,545

Investments/divestments
In financial year 2020/21, METRO invested €764 million and is thus €137 million above the

previous year’s investment volume of €627 million.

The increase in investments resulted largely from lease extensions of larger store portfolios in

France and Germany, which allowed us to secure the store network long-term.

Moreover, the increase in the Western Europe region is attributable to the acquisition of the

food suppliers Aviludo and Davigel Spain. It allowed METRO to significantly expand the supply

network in financial year 2020/21 again, thus strengthening its competence in food service

distribution in the Portuguese and Spanish wholesale industry.

With 4 new store openings, METRO expanded more in 2020/21 than in the previous year

(2019/20: 1 new opening). While 1 new METRO store was opened in Ukraine in the previous

financial year, METRO has continued its expansion in India with 3 new openings in the current

year and additionally opened a new store in Pakistan. In financial year 2020/21 there was also 1

closure in Germany.

The decrease in investments in Eastern Europe compared to the previous year is mainly due

to lower non-cash investments in the delivery area.

The investment focus in financial year 2020/21 continues to be on IT and digitalisation. This

mainly concerns the Others segment. The declining investments there are primarily attributable

to the strategic partnership with the international IT service provider Wipro Limited.

The divestments in financial year 2020/21 amount to €179 million and mainly relate to the sale

of an at-equity investment in a retail location portfolio in Germany and the disposal of real

estate.

For more information about divestments, see the cash flow statement in the consolidated financial statements as
well as the notes to the consolidated financial statements under no. 40 – Notes to the cash flow statement
233 .

page

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METRO INVESTMENTS

€ million

Germany

Western Europe (excl. Germany)

Russia

Eastern Europe (excl. Russia)

Asia

Others

METRO

2019/20

2020/21

absolute

Changes

213

107

189

627

114

347

165

764

134

−30

−24

137

47.5

63.3

55.6

−28.3

43.5

−12.7

21.8

Liquidity (cash flow statement)
Cash inflow from operating activities from continuing operations amounted to €1,237 million in

financial year 2020/21 (2019/20: cash inflow of €646 million). In the previous year, the operating

cash flow was affected by the Covid-19 pandemic. The improvement this year is largely

attributable to the improvement in cash flow from net working capital. This is mainly the result

of the significantly improved business development in the second half of the year and a

corresponding adjustment in ordering behaviour.

Investing activities led to cash outflow of €137 million (2019/20: cash outflow of

€265 million). In addition to slightly lower outgoing payments for investments, the improvement

is mainly attributable to higher incoming payments in connection with property disposals.

Compared with previous year’s period, this represents an increase in cash flow before financing

activities of €720 million.

Cash flow from financing activities exhibited a cash outflow of €1,152 million (2019/20: cash

outflow of €1,280 million). This includes redemptions of financial liabilities in the amount of

€779 million, lease payments in the amount of €541 million and dividends paid in the amount of

€254 million. This was offset by proceeds from financial liabilities, which amounted to

€474 million.

Total cash flows amount to €−52 million (2019/20: €510 million). In the previous year, this

amount included the proceeds from the disposal of the hypermarket business including the real

estate portfolio and METRO China.

For more information, see the cash flow statement in the consolidated financial statements as well as no. 40 – Notes
to the cash flow statement

page 233 .

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CASH FLOW STATEMENT1

€ million

Cash flow from operating activities of continuing operations

Cash flow from operating activities of discontinued operations

Cash flow from operating activities

Cash flow from investing activities of continuing operations

Cash flow from investing activities of discontinued operations

Cash flow from investing activities

Cash flow before financing activities of continuing operations

Cash flow before financing activities of discontinued operations

Cash flow before financing activities

Cash flow from financing activities of continuing operations

Cash flow from financing activities of discontinued operations

Cash flow from financing activities

Total cash flows

Currency effects on cash and cash equivalents

Total change in cash and cash equivalents

1 Abridged version. The complete version is shown in the consolidated financial statements.

2019/20

2020/21

646

416

1,062

−265

1,271

1,006

380

1,687

2,068

−1,280

−278

−1,557

510

−29

482

1,237

−137

1,100

−1,152

−52

−51

Capital structure
As of 30 September 2021, the METRO balance sheet reports equity in the amount of €1.8 billion

(30/9/2020: €2.0 billion).

Reserves retained from earnings were mainly reduced due to dividend payments for financial

year 2019/20 in the amount of €−254 million, as well as profit or loss for the period attributable

to shareholders of METRO AG in the amount of €−56 million. This was mainly offset by currency

translation differences in equity in the amount of €110 million, particularly due to the

development of the rouble. The equity ratio stands at 14.4% (30/9/2020: 15.5%).

Negative reserves retained from earnings are not due to a history of loss but mainly due to

reclassification of the equity item net assets attributable to the former METRO GROUP,

recognised in the combined financial statements of the MWFS GROUP as of 1 October 2016, to

the legally defined equity items.

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€ million

Equity

Share capital

Capital reserve

Reserves retained from earnings

Equity before non-controlling interests

Non-controlling interests

Note no.

30/9/20201

30/9/2021

2,039

363

5,048

−3,380

2,031

1,847

363

5,048

−3,585

1,826

1 Previous year’s comparative values were adjusted due to a change in the accounting method (inventories); see the notes section ‘Change in accounting method

(inventories)’.

For more information about our equity, see the notes to the consolidated financial statements in the number listed in
the table.

Net debt decreased by €0.3 billion and amounts to €3.5 billion as of 30 September 2021 (30/9/

2020: €3.8 billion). The cash and cash equivalents remained nearly constant at €1.5 billion (30/

9/2020: €1.5 billion). By contrast, financial liabilities decreased by €0.4 billion to €5.0 billion

(30/9/2020: €5.3 billion).

€ million

Cash and cash equivalents

Current financial investments1

Financial liabilities (incl. liabilities from leases)

Net debt

1 Shown in the balance sheet under other financial assets (current).

30/9/2020

30/9/2021

1,525

5,314

3,771

1,474

4,954

3,466

As of 30 September 2021, METRO’s non-current liabilities amount to €4.6 billion (30/9/2020:

€5.5 billion). Financial liabilities decreased by €0.7 billion to €3.8 billion, since many of them

came due.

As of 30 September 2021, METRO’s current liabilities amount to €6.3 billion (30/9/2020:

€5.6 billion). Financial liabilities increased by €0.4 billion to €1.2 billion. Trade liabilities

increased by €0.3 billion to €3.5 billion, mainly due to changes in purchasing volumes. The

increase in income tax liabilities is mainly attributable to the planned country exit of Japan. A

correspondingly opposite effect led to an increase in deferred tax assets.

Compared to 30 September 2020, the debt ratio increased from 84.5% by 1.1 percentage

point to 85.6%.

For more information about the maturity, currency and interest rate structure of financial liabilities as well as the
page 219 .
credit facilities, see the notes to the consolidated financial statements in no. 35 – Financial liabilities

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€ million

Non-current liabilities

Provisions for post-employment benefits plans and similar obligations

Other provisions

Financial liabilities

Other financial and other non-financial liabilities

Deferred tax liabilities

Current liabilities

Trade liabilities

Provisions

Financial liabilities

Other financial and other non-financial liabilities

Income tax liabilities

Liabilities related to assets held for sale

Note no.

30/9/2020

30/9/2021

33, 35

33, 36

33, 34

33, 35

33, 36

5,506

550

139

4,541

210

5,625

3,199

287

773

1,175

184

4,646

531

155

3,798

6,327

3,476

290

1,155

1,128

277

For more information about the development of liabilities, see the notes to the consolidated financial statements in
the numbers listed in the table. Information about contingent liabilities and other financial liabilities can be found in
the notes to the consolidated financial statements in no. 44 – Contingent liabilities
financial commitments

page 245 and no. 45 – Other

page 245 .

Asset position
In financial year 2020/21, METRO’s total assets decreased by €0.4 billion to €12.8 billion (30/9/

2020: €13.2 billion).

There was a decrease of €0.3 billion in non-current assets to €8.0 billion in financial year

2020/21 (30/9/2020: €8.3 billion), particularly affecting property, plant and equipment. Due to

the pandemic, this is attributable to restrained investing activities as well as disposals and lower

investments in connection with the strategic partnership with IT service provider Wipro Limited.

The decline in investments accounted for using the equity method results in particular from the

disposal of shares in a store network in Germany.

€ million

Non-current assets

Goodwill

Other intangible assets

Property, plant and equipment

Investment properties

Financial assets

Investments accounted for using the equity method

Other financial and other non-financial assets

Deferred tax assets

Note no.

30/9/20201

30/9/2021

8,284

731

576

5,811

188

421

201

258

8,004

644

568

5,663

170

361

162

345

1 Previous year’s comparative values were adjusted due to a change in the accounting method (inventories); see the notes section ‘Change in accounting method

(inventories)’.

For more information about the development of non-current assets, see the notes to the consolidated financial
statements in the numbers listed in the table.

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METRO’s current assets decreased by €0.1 billion compared to previous year’s figures to

€4.8 billion (30/9/2020: €4.9 billion). While inventories increased by €0.1 billion to €2.0 billion

(30/9/2020: €1.9 billion) as part of the increased business volume, VAT refund claims were

settled. Cash remained nearly constant at €1.5 billion (30/9/2020: €1.5 billion).

€ million

Current assets

Inventories

Trade receivables

Financial assets

Other financial and other non-financial assets

Entitlements to income tax refunds

Cash and cash equivalents

Assets held for sale

Note no.

30/9/20201

30/9/2021

4,886

1,860

429

902

145

1,525

4,815

1,964

496

785

1,474

1 Previous year’s comparative values were adjusted due to a change in the accounting method (inventories); see the notes section ‘Change in accounting method

(inventories)’.

For more information about the development of current assets, see the notes to the consolidated financial
statements in the numbers listed in the table.

Earnings position

Overview of group business development
Financial year 2020/21 was particularly dominated by the Covid-19 pandemic and the associated

government measures. They had a negative impact on the business development, especially in

the first half of the year. In the course of the second half of the year, government measures were

eased, resulting in a trend reversal and a significantly improved business performance. This is

partly attributable to the relaxation of Covid-19 protective measures, which began gradually in

May and became more wide-ranging as the financial year progressed. On the other hand,

METRO took numerous measures at country level to reinforce its operational business in the

food service and hospitality industries. The measures included activation of existing customers

and acquisition of new ones, for example through ‘new start’ discounts, payment term

campaigns or special assortments.

The development of METRO’s individual segments has been affected by the Covid-19

pandemic to varying degrees. The development largely depends on the composition of the

customer groups as well as the duration and intensity of the restrictions in the respective

countries. After declines in the first half of the year, sales of the HoReCa customer group

increased significantly again in the second half of the year in the course of the recovery of the

hospitality and tourism industry. Especially in countries with a high HoReCa share of sales and in

countries where government measures were more stringent at the beginning of the year,

progress in the fight against the pandemic and the associated positive effects on public life and

METRO’s business development became apparent in the second half of the year. Thus, since
June, sales have been above the pre-pandemic level. According to market estimates22, METRO
outperformed the HoReCa market in Germany and in some other Western European countries

with strong HoReCa performance.

22 npdgroup CREST panel, NPD.

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For financial year 2020/21, after a strong development in the second half of the year, sales

development in local currency is at previous year’s level (0.0%). Like-for-like sales decreased

slightly by −0.4%. The sales development in local currency was positive in Eastern Europe,

Russia and Asia. Germany and Western Europe recorded a negative sales development, mainly

due to the effects of the Covid-19 pandemic. Due to negative currency effects, especially in

Russia and Turkey, sales in € decreased by −3.4% to €24.8 billion.

Adjusted EBITDA reached €1,171 million in financial year 2020/21 (2019/20: €1,158 million).

Here again, the recovery in sales was also reflected in the earnings development. Furthermore,

positive one-time effects in the mid-double-digit million euro range had an impact in the

segments Western Europe (excluding Germany), Eastern Europe (excluding Russia) and

especially in the Others segment, which mainly occurred in H1 2020/21. Negative currency effect

developments, especially of the Russian and Turkish currencies, also impacted the earnings

development. Adjusted for currency effects, EBITDA increased by €72 million or 6.5% (with

Aviludo and Davigel Spain) compared to the same period of the previous year. Transformation

costs of €65 million were incurred in financial year 2020/21 (2019/20: €47 million). They are

mainly attributable to Q4 2020/21 and relate to the country exits from Japan, Myanmar and the

Philippines (Classic Fine Foods).

Earnings contributions from real estate transactions amounted to €60 million (2019/20:

€3 million) and resulted mainly from the sale of the last remaining real estate property of the

hypermarket business, the disposal of an at-equity investment in a retail location portfolio in

Germany and a sale-and-leaseback transaction in Portugal. The EBITDA reached a total of

€1,166 million (2019/20: €1,113 million).

€ million

Sales

Adjusted EBITDA

Transformation costs

Earnings contributions from real estate transactions

EBITDA

EBIT

Investments

Locations (number)

Selling space (1,000 m2)

2019/20

2020/21

Change

25,632

1,158

1,113

257

627

678

24,765

1,171

1,166

197

764

681

4,723

4,636

−3.4%

1.1%

39.3%

–

4.7%

−23.5%

21.8%

0.4%

−1.8%

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The reconciliation from sales to like-for-like sales in local currency is shown in the following:

€ million

Total sales

Total sales in local currency1

Sales of stores that were not part of the like-for-like panel in 2020/212

Like-for-like sales in local currency

Continuing operations

2019/20

2020/21

Change

25,632

24,772

24,707

24,765

164

24,601

−3.4%

0.0%

–

−0.4%

1 Sales in local currency of the previous year were calculated by converting reported sales of the previous year at the average exchange rate of the current financial year.
2 Not included in the like-for-like panel are, among others, new openings, stores in start-up phase, closures, acquisitions, service companies and outlets with major

refurbishments.

Comparison of outlook with actual business developments
Due to the volatile course of the Covid-19 pandemic and government restrictions, the outlook

issued on 14 December 2020 was revised during the financial year on 20 April 2021. This was

due to the continuous extension and high volatility of regulatory measures related to the

Covid-19 pandemic at that time. With restrictions continuously easing and the resulting business

development exceeding expectations, this outlook was increased again on 27 July 2021.

Dedicated operational measures to support the re-start of our customers resulted in continuous

market share gains. The subsequent comparison of the actual business development with the

outlook for financial year 2020/21 refers to the outlook published on 27 July 2021.

For financial year 2020/21, METRO’s outlook on 27 July 2021 projected a decline in total sales

and like-for-like sales of −0.5% to −3.5% compared to the previous year and a development in

EBITDA excluding earnings contributions from real estate transactions and transformation costs

of €+50 million to €−75 million compared to the previous year. The outlook was based on the

assumption of stable exchange rates and no further adjustments to the portfolio (this means:

with Japan and Myanmar, without Davigel Spain and Aviludo). The lower end of the outlook

range took into account a potential partial return to restrictions due to the unchanged high

uncertainty and volatility regarding the further development of the pandemic.

For the financial year, the impact of government restrictions on sales and earnings remained

highest in regions with a high share of hospitality customers, such as in the Western Europe

segment (excl. Germany). In terms of sales, a positive development was expected in the Russia,

Eastern Europe (excl. Russia) and Asia segments. On the earnings side, a heterogeneous

development in the segments was expected, with the group result being determined in

particular by the further sales-dependent development in Western Europe (excl. Germany).

With a development in total sales in local currency at previous year’s level (0.0%) or −0.4%
adjusted for initial consolidations23 and like-for-like sales of −0.4%, METRO reached the upper
end of the outlook (−0.5% to −3.5%). The positive development expected for Russia, Eastern

Europe (excl. Russia) and Asia in terms of sales occurred as expected.

23 Outlook view: constant portfolio, adjusted for initial consolidation of the Aviludo Group and Davigel Spain.

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Adjusted EBITDA with Aviludo and Davigel Spain reached a total of €1,171 million in financial

year 2020/21 (2019/20: €1,158 million). Without Aviludo and Davigel Spain adjusted EBITDA

reached €1,164 million. Adjusted for negative currency effects of €59 million, EBITDA increased

by €65 million or 5.9% (without Davigel Spain and Aviludo) compared to the previous year and

thus also reached the upper end of the outlook range (€+50 million to €−75 million). On the

earnings side, a heterogeneous development in the segments was expected, with the group

result being determined in particular by the further sales-dependent development in Western

Europe (excl. Germany). Due to the strong recovery in the second half of the year, adjusted

EBITDA (without Aviludo and Davigel Spain) in Western Europe (excl. Germany) for the financial

year was only €−7 million below the previous year. Adjusted for currency effects, the other

segments were all above previous year’s level. In this area, Eastern Europe (excl. Russia) and in

particular the segment Others were supported by positive one-time effects.

METRO achieved its adjusted sales and earnings outlook for financial year 2020/21 at the

upper end of the outlook range.

Sales and earnings development of the segments
In Germany sales in local currency in financial year 2020/21 declined by −5.2%. Like-for-like sales

decreased by −4.8%. This is mainly attributable to a significant decline in sales to HoReCa

customers in the wake of the Covid-19 pandemic, particularly in H1 2020/21. In the course of the

gradual reopening of the hospitality industry business, the sales development in the HoReCa

segment improved in the second half of the year. However, it could not compensate for the

declines in the other customer groups, among others due to the reduction of the tobacco

business. Nevertheless, the HoReCa business developed better than the market. Reported sales

decreased by −5.2% to €4.5 billion.

In Western Europe (excl. Germany), sales in local currency in financial year 2020/21 declined

by −2.3%. Like-for-like sales decreased by −3.2%. In this area, the effects of the Covid-19

pandemic had an impact in the first half of the year. France and Italy were particularly affected

by the government-imposed restrictions. In the second half of the year, a rapid and significant

recovery of the HoReCa business set in with the gradual reopening of the hospitality and

tourism sectors. The biggest drivers were France, Italy and Spain. In those countries, the HoReCa

business outperformed the market. In addition, the sales of the delivery companies Aviludo in

Portugal and Davigel in Spain contributed positively to the sales development since the initial

consolidation. Total sales in Q4 2020/21 already returned to pre-pandemic levels. Reported sales

in financial year 2020/21 dropped by −2.3% to €9.4 billion.

In Russia, sales in local currency grew by 3.3% and like-for-like sales by 3.6% in financial year

2020/21. Sales growth was driven by the HoReCa and Traders customer groups. Due to negative

currency effects, reported sales decreased by −10.2% to €2.4 billion.

In Eastern Europe (excl. Russia), sales in local currency and like-for-like sales increased by

4.5% in financial year 2020/21. Adjusted for currency effects, Romania, Ukraine and Turkey in

particular developed positively. In Poland, the Czech Republic, Hungary and Slovakia,

Covid-19-related restrictions had a particularly negative impact. Due to negative currency

effects, especially in Turkey and Ukraine, reported sales decreased by −1.7% to €7.0 billion.

Sales in local currency in Asia increased by 3.3% and like-for-like sales by 1.4% in financial

year 2020/21. Classic Fine Foods and India in particular benefited from the recovery in the

hospitality sector in the second half of the year. Due to negative currency effects, especially in

India and Japan, reported sales decreased by −2.8% to €1.5 billion.

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In financial year 2020/21, METRO’s delivery sales increased by 5.8% to approximately

€4.2 billion (2019/20: €3.9 billion) and achieved a sales share of 17% (2019/20: 15%). As of

30 September 2021, the store network comprised 681 stores (3 new openings in India, 1 new

opening in Pakistan and 1 closure in Germany).

METRO KEY SALES FIGURES 2020/21

In year-on-year comparison

METRO

Germany

Western Europe (excl. Germany)

Russia

Eastern Europe (excl. Russia)

Asia

Others

Sales (in € million)

Change in %
compared with the previous year’s period

2019/20

2020/21

in group
currency
(€)

Currency
effects in
percentage
points

like-for-like
sales
(in local
currency)

in local
currency

25,632

24,765

−3.4%

4,699

9,603

2,644

7,125

1,539

4,457

9,384

2,374

7,004

1,496

−5.2%

−2.3%

0.0%

−10.2%

−13.5%

−1.7%

−2.8%

–

−6.2%

–

0.0%

−5.2%

−2.3%

3.3%

4.5%

3.3%

–

−0.4%

−4.8%

−3.2%

3.6%

4.5%

1.4%

–

In Germany, adjusted EBITDA reached a total of €149 million in financial year 2020/21 (2019/20:

€125 million). This was mainly attributable to a good margin development and stringent cost

management. METRO Germany performed significantly better overall than Rungis Express,

where government restrictions had a significantly more negative impact due to the strong focus

on hospitality industry customers.

In Western Europe (excl. Germany), adjusted EBITDA in financial year 2020/21 stayed at

previous year’s level of €394 million (2019/20: €394 million). The earnings development

generally followed the slightly negative sales development. The acquisition of Davigel Spain

resulted in one-time income in the mid single-digit million euro range with positive offsetting

effect as part of the initial consolidation. The earnings contributions from real estate

transactions amounted to €18 million (2019/20: €1 million) and resulted mainly from a sale-and-

lease-back transaction in Portugal.

Adjusted EBITDA in Russia amounted to €197 million in financial year 2020/21 (2019/20:

€224 million). Adjusted for currency effects, EBITDA increased by €2 million.

In Eastern Europe (excl. Russia), adjusted EBITDA reached a total of €366 million in financial

year 2020/21 (2019/20: €371 million). This decrease is mainly attributable to negative currency

effects in Turkey. Adjusted for currency effects, Romania, Turkey and Ukraine were able to

compensate for the declining development in the Czech Republic, Slovakia and Poland.

Furthermore, the termination of a legal dispute contributed positively to the earnings

development with an amount in the mid single-digit million euro range. Adjusted for currency

effects, EBITDA in Eastern Europe (excl. Russia) increased by €18 million.

Adjusted EBITDA in Asia reached a total of €7 million in financial year 2020/21 (2019/20:

€0 million). Licensing revenues from the ownership share of the METRO China partnership with

Wumei made a positive contribution of a low single-digit million euro amount to the earnings

development. Adjusted for currency effects, EBITDA in Asia increased by €6 million.

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Transformation costs of €45 million (2019/20: €0 million) were incurred due to the country exits

from Japan, Myanmar and the Philippines (Classic Fine Foods).

Adjusted EBITDA in the Others segment amounted to €59 million in financial year 2020/21

(2019/20: €42 million). The improvement compared to the previous year is attributable to

various sustainable, temporary and one-time effects. Sustainable effects include savings from

the restructuring carried out in the previous year, which had a positive impact on personnel

expenses. Temporary effects resulted from licensing revenues from the partnership with Wumei

(which will continue to contribute to the earnings development until April 2023). Moreover, one-

off income of around €30 million contributed to the earnings development. It resulted from the

termination of arbitration proceedings, the reassessment of transaction-related provisions and

the final purchase price valuation of the METRO China transaction. Earnings contributions from

real estate transactions amounted to €42 million (2019/20: €0 million) and resulted mainly from

the sale of the last remaining real estate property of the hypermarket business and the disposal

of an at-equity investment in a retail store network in Germany.

Adjusted EBITDA

Transformation costs

Earnings
contributions from
real estate
transactions

EBITDA

€ million

Total

Germany

Western Europe
(excl. Germany)

Russia

Eastern Europe
(excl. Russia)

Asia

Others

Consolidation

2019/20

2020/21

Change
(€)

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

1,158

125

394

224

371

1,171

149

394

197

366

−1

−27

−5

−2

1,113

125

395

224

373

−5

1,166

138

412

197

366

−38

−1

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Depreciation, financial result and taxes

DEPRECIATION, FINANCIAL RESULT AND TAXES

€ million

EBITDA

Depreciation

Reversals of impairment losses

Earnings before interest and taxes EBIT

Earnings share of non-operating companies recognised at equity

Other investment result

Interest income/expenses (interest result)

Other financial result

Net financial result

Earnings before taxes EBT

Income taxes

Profit or loss for the period from continuing operations

Profit or loss for the period from discontinued operations after taxes

Profit or loss for the period

2019/20

2020/21

1,113

857

257

−220

−72

−289

−32

−108

−140

612

471

1,166

969

197

−194

−157

−85

−45

Depreciation
Impairment losses increased by €112 million from €857 million to €969 million. This increase is

mainly attributable to the fact that impairments were higher than in the previous year.

Impairment losses of €95 million were recognised in the financial year; they are mainly

attributable to goodwill of METRO Cash & Carry Germany due to expected pandemic-related

uncertainties in the hospitality market. Likewise, changes in the logistics chain, an increased

focus on availability of goods and further investment activities have consequences for future

cash flows. Furthermore, impairments due to transformation projects, mainly country exits in the

Asia segment (Japan, Myanmar as well as Classic Fine Foods Philippines) amounting to

€49 million as well as impairments at individual locations were incurred.

Further disclosures about impairment losses are provided in the notes to the consolidated financial statements in no.
page 183 .
15 – Depreciation/amortisation/impairment losses

Net financial result
The net financial result primarily comprises the interest result of €−194 million (2019/20:

€−220 million) and the other financial result of €25 million (2019/20: €−72 million). The net

interest result improved significantly as a result of declining interest expenses from leases. The

other financial result benefited significantly from a net positive currency effect development of

the Eastern European currencies and the Turkish lira. The latter therefore had less of an adverse

effect on the valuation of foreign currency lease liabilities than in the previous year.

For more information about the net financial result, see the notes to the consolidated financial statements in no. 7 –
Earnings share of operating/non-operating companies recognised at equity
page 177 , no. 9 – Net interest income/interest expenses
result

page 178 and no. 10 – Other financial result

page 177 , no. 8 – Other investment

page 178 .

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Taxes
The decrease of €23 million in the recognised income tax expenses is mainly attributable to

opposing effects between effective and deferred taxes in Austria (country exit Japan) and

Russia as well as to reversal effects of deferred tax liabilities in Germany.

For more information about income taxes, see the notes to the consolidated financial statements in no. 12 – Income
taxes

page 180 .

€ million

Actual taxes

thereof Germany

thereof international

thereof tax expenses/income of current period

thereof tax expenses/income of previous periods

Deferred taxes

thereof Germany

thereof international

2019/20

2020/21

133

(10)

(123)

(143)

(−10)

−25

(24)

(−49)

108

157

(12)

(145)

(102)

(55)

−72

(3)

(−76)

Profit or loss for the period and earnings per share
The profit or loss for the period in financial year 2020/21 was €−45 million, €95 million higher

than the profit or loss for the period from continuing operations of the previous year (2019/20:

€−140 million).

The profit or loss for the period of the discontinued operations of METRO AG was

€612 million in the previous year and included transaction proceeds.

Overall, the profit or loss for the period in financial year 2020/21 is thus significantly lower

than the net result for the period of all activities in the previous year.

After deduction of the profit shares attributable to non-controlling interests, the profit or loss

for the period attributable to the shareholders of METRO AG is €−56 million (2019/20:

€460 million; thereof €−146 million from continuing operations).

On this basis, METRO achieved earnings of €−0.15 per share in financial year 2020/21 (2019/

20: €1.27, of which €−0.40 came from continuing operations). The calculation for the reporting

period was based on a weighted number of 363,097,253 shares. Profit or loss for the period

attributable to shareholders of METRO AG was distributed according to this number of shares.

There was no dilution from so-called potential shares in financial year 2020/21 or in the previous

year.

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4 R E P O R T O N E V E N T S A F T E R T H E C L O S I N G D A T E
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4 REPORT ON EVENTS AFTER THE CLOSING DATE AND OUTLOOK

Report on events after the closing date

Events after the closing date
At its meeting on 11 November 2021, the Supervisory Board of METRO AG decided to reorganise

the Management Board of METRO AG. The restructured Management Board will ensure the

execution of the new strategy from next year on. The following changes were agreed:

Eric Poirier, Chief Operating Officer (COO) and member of the Management Board, will leave

the Management Board with effect from 31 December 2021. Andrea Euenheim, Chief Human

Resources Officer (CHRO) and member of the Management Board, will not renew her contract

when it comes to an end on 31 October 2022, but will continue to perform her current role until

that date.

Rafael Gasset, Chief Operating Officer (COO) and member of the Management Board, will

assume responsibility for the countries at Management Board level. The Germany/Austria unit

will report to CEO Dr Steffen Greubel in the Management Board.

With effect from 1 January 2022, Claude Sarrailh will join the Management Board, where he

will be responsible for commercial functions as Chief Customer & Merchandise Officer (CCMO).

Outlook

The outlook prepared by METRO considers relevant facts and events that were known at the

time of preparing the consolidated financial statements and that may impact the future

development of our business. The outlook on economic parameters is based on an analysis of

primary data used to derive forecasts. Oxford Economics is the main data source used to

forecast business conditions. It is important to understand that the statements below are made

in the context of the current pandemic. Due to the volatile global development of the infection

and of government countermeasures associated with combating it, all forecasts are subject to a

high degree of uncertainty. Therefore, they could not only change quickly, but also significantly.

The statements made for this report relate to the closing date of 2 November 2021. They may

have become obsolete due to recent developments since then.

Macroeconomic parameters

Global economy
Compared to the previous year, the global economy is expected to gradually recover in the

course of the financial year 2021/22 with real growth of 5.1%. However, it will be significantly

influenced by the continuous development of the pandemic, but also by a current global supply

chain bottleneck and raised raw material prices. It is instrumental for a full recovery that no new

virus variants evolve or that the vaccination successes achieved so far do not level off due to an

overload of the respective health care systems and thus trigger another sharp recession. It is

also assumed that the government measures taken to combat the pandemic and the

interventions to support the economy will be (fully) scaled back. However, there are increasing

concerns that infection numbers are rising and some countries are already withdrawing initial

relaxations, for example, in the Netherlands, Austria, Russia, Ukraine and Germany.

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Furthermore, producers and retailers all over the world are facing a combination of supply

chain bottlenecks and rising prices for raw materials and energy. This also has a negative impact

on consumer prices and real earnings. The magnitude mainly depends on the duration of the

current situation. For example, the current bottleneck in the global supply chain, triggered by

low inventory levels, raw material shortages and very high utilisation of logistics services, is

expected to adversely affect the economic recovery, especially in the manufacturing sector. It

will probably continue through H1 2021/22.

Economic growth will also be (almost) entirely driven by the return of consumer spending in

sectors that were previously particularly impacted by the pandemic, such as hospitality or

tourism. A significant increase in private consumption and a decline in the savings rate are

expected. However, before the inflation rate declines again, it is expected to continue to rise

until H1 2021/22, possibly significantly in some countries such as Germany. This also affects food

prices. It remains to be seen how wages and labour markets develop in return. In addition, some

national economies and industry sectors are already experiencing staff shortages, which have

also been triggered by a migration of labour between economic sectors. For example, there is a

shortage of service staff in the hospitality industry and drivers in the logistics sector.

The economic effects of potential international trade dispute cannot yet be estimated. The

economic consequences of Brexit will probably become more apparent in financial year 2021/22

than before, especially if the current renegotiations fail and lead to mutual trade sanctions. In

addition, trade policy consequences on global trade could arise from tensions in the Indo-Pacific

region and between the USA and China, which may result in economic sanctions on goods or

trade routes.

Germany
Real economic growth of 4.8% is expected for financial year 2021/22. It is expected to return to

the pre-pandemic performance level. The main prerequisite here is that the pandemic situation

continues to improve. With the resulting gradual withdrawal of social restrictions, the German

economy is expected to be further stimulated, and consumers will use the resulting greater

leeway for consumer spending. This is especially true for the hospitality and event industry.

Private consumer spending in Germany is therefore expected to turn out significantly more

positive, especially in H1 2021/22. At the same time, however, another temporary increase in

inflation is also expected, which will be broadly spread out across many product groups, but

especially on energy and food spending. It remains to be seen how wages will develop in this

environment in the respective sectors and wether any real income losses can be absorbed.

However, the labour market is expected to remain at a stable level overall. Another risk factor is

the global supply chain bottleneck, which particularly affects Germany as an export-rich country.

This bottleneck is expected to extend into H1 2021/22 and thus significantly constrain the

manufacturing sector. Therefore, exports in general and the automotive sector in particular will

be impacted, even if industrial production as well as imports and exports develop positively

overall.

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Western Europe
For the coming financial year, a significant economic recovery is expected for Western Europe as

a whole (+5.4% real growth), along with an economic output level just above the financial year

before the start of the pandemic. Again, the main condition for recovery is the (slow) return to a

normal social life. The forecasts further call for an accompanying increase in private consumer

spending, especially in the hospitality and event industry. Inflation is also expected to continue

to increase in Western Europe, although the magnitude will vary from country to country. The

labour market is expected to be stable overall, with the unemployment rate in Spain remaining at

a high level. Imports and exports are forecast to develop positively, although industrial

production will be negatively affected by the global supply shortage and increased energy costs.

The tourist-oriented countries France, Italy, Spain and Austria can expect a very significant

increase in tourism. The development of the hospitality industry is closely aligned with the

tourism sector. In Western Europe, the hospitality industry is expected to develop positively

compared to 2021, but still below the pre-pandemic level of 2019.

Russia
For Russia, economic growth is currently projected at 1.8%, even though vaccination coverage

lags significantly behind other developed countries and there is a high infection rate.

Temporarily introduced mandatory leaves may lead to a decline in consumption, since this time,

unvaccinated people in particular are also subject to special restrictions. Private consumer

spending is expected to increase with stable inflation and a positive development of imports and

exports. The important energy and raw materials sector is forecast to grow strongly. There is

high demand for minerals, and oil production is expected to increase following the decision of

OPEC+. The labour market will continue to develop positively. Household spending in the food

retail sector is expected to decrease slightly in real terms compared to 2021, but will remain well

above the pre-pandemic level of 2019. Further growth is expected for the hospitality industry.

Eastern Europe
The economy in Eastern Europe is expected to grow by 4.1% in real terms, exceeding the pre-

pandemic level. Despite low vaccination rates in some parts, the individual countries have scaled

back social restrictions to varying degrees, which is causing a boost to the economy. This is

especially true for the Turkish economy, whose current upswing will continue in the coming year

according to current forecasts. Very positive growth is also expected for the other Eastern

European countries in the METRO portfolio. These forecasts are also subject to a slowdown in

infections and a stable health care system. Private consumer spending, especially in the

hospitality and event industry, is expected to develop positively in most Eastern European

countries. A strong increase in consumer spending is especially expected in Turkey. However,

driven by food and energy prices, the inflation rate in Eastern Europe is also expected to

increase significantly. This could reduce real earnings and thus have an effect on consumer

spending. In combination with a weak currency development (for example in Turkey), this could

have an additional negative effect on the consumption of certain imported goods and services.

Overall, a positive development is expected for imports and exports, and the labour market is

expected to remain at a good level. A significant increase in the number of tourists is predicted

for tourist-oriented Eastern European countries such as Turkey or Croatia, which should also be

reflected in the hospitality industry. Likewise, a continued positive development in demand is

expected for Traders, as the basic food supply would become particularly important in a tense

infection situation. In Poland, it will be critical to see how the current political conflict with the

EU affects the economy. For example, there could be a delay in disbursement from the EU fund

for coronavirus aid or further fines.

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Asia
The Asian economy is expected to grow by more than 5%. In India, however, there is a risk of a

renewed recession due to the worsening infection situation and the reintroduction of restrictive

measures. Private consumer spending is expected to develop quite positively, especially in Q1

2021/22, despite high, rising inflation. The labour market as well as imports and exports are

expected to continue to develop positively.

Outlook of METRO
The outlook is based on the assumption of stable exchange rates and no further adjustments to

the portfolio (that is, without Japan and Myanmar, with Aviludo and Davigel Spain). The relevant

opportunities and risks that influence the outlook are explained in the opportunities and risk

report. The sales and earnings outlook depends particularly on the further development of the

Covid-19 pandemic in financial year 2021/22. Temporary and limited governmental restrictions on

social life, especially in H1 of financial year 2021/22, have been taken into consideration.

Sales
The Management Board expects a total sales growth of 3% to 7% (2020/21: 0.0% with Japan and

Myanmar, 0.1% without Japan and Myanmar) for financial year 2021/22, hence reaching the pre-
pandemic level24. The HoReCa business is expected to be the main growth driver, especially due
to high momentum in delivery. All segments will contribute to the growth. For Western Europe

(excl. Germany), a significantly overproportionate growth is expected. Germany is expected to

grow below the group range, also due to the reduction of the tobacco business.

Earnings
The Management Board further expects an EBITDA adjusted on the level of the past financial

year 2020/21 (€1,187 million without Japan and Myanmar). For Western Europe (excl. Germany),

a significant growth is expected. The segment Others was supported by one-time effects in the

mid double-digit million euro range in financial year 2020/21. Due to this and further

digitalisation efforts, it will therefore be noticeably below the level of the previous year.

24 On a comparable, operational level.

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5 OPPORTUNITIES AND RISK REPORT

Risk management system and internal control system

A prerequisite for the long-term success of our company is to identify opportunities and risks at

an early stage and to exploit or manage them.

The Management Board of METRO AG bears overall responsibility for an effective risk

management system (RMS) and an effective internal control system (ICS).

The RMS and the ICS of METRO are implemented by the Group Governance department

based on the recommendations of the Committee of Sponsoring Organizations of the Treadway

Commission (COSO) and the requirements of the audit standards 981 and 982 of the Institut der

Wirtschaftsprüfer in Deutschland e. V. (IDW, Institute of Public Auditors in Germany).

Accordingly, the management systems consist of the following elements:

RISK MANAGEMENT SYSTEM AND INTERNAL CONTROL SYSTEM

Elements of METRO’s
risk management system and internal control system

Purpose and
culture

Purpose and
control
environment

Monitoring
and
improvement

Organisation

Communication,
training and
reporting

RMS process:
identification,
assessment
and response

ICS
process

Objectives of the RMS and ICS
The overarching objectives of the RMS and ICS are to protect assets and support sustainable

growth for METRO. The RMS supports these objectives through systematic reporting on

opportunities and risks. It facilitates informed decisions and creates transparency. The ICS

supports the aforementioned objectives by creating reliable operational and financial processes

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in order to ensure the accuracy, completeness and timeliness of financial reporting in particular

and compliance with laws and guidelines.

Organisation of the RMS and ICS
Group-wide RMS and ICS tasks and responsibilities are clearly defined and reflect our corporate

structure. We combine centralised business management by the management holding company

METRO AG with the decentralised responsibility of the METRO national subsidiaries and the

service companies that support the operational business.

It is the responsibility and a legal obligation of the Management Board of METRO AG to

organise a governance, risk and compliance system (GRC system) for METRO. We regard the risk

management system, the internal control system, the compliance management system (CMS) as

well as Internal Audit to be components of the GRC system. This organisational structure is

based on the governance elements identified in § 107 Section 3 of the German Stock

Corporation Act (AktG) as well as the German Corporate Governance Code. The fundamental

principles of the GRC system are defined and documented in our governance, risk and

compliance guideline. On this basis, we continuously work on increasing the efficiency and

effectiveness of the GRC system.

The group’s Governance, Risk and Compliance Committee (GRCC) is chaired by the Chief

Financial Officer of METRO AG and regularly discusses methods and further developments of

the GRC subsystems. The structural and procedural organisation of the RMS and the ICS are

clearly defined in the relevant guidelines and implemented throughout the group.

Identification, assessment and steering of risks
We only assume business risks if they are considered to be manageable and if the associated

opportunities promise an appropriate increase in our value. We bear the risks associated with

the core processes of the wholesale business ourselves. These core processes include the

development and implementation of business models, decisions about store locations and the

procurement and sale of merchandise and services. Risks associated with supporting processes

are mitigated within the group or transferred to third parties where reasonable. We generally do

not assume risks that are related neither to core nor to supporting processes. Risks assessed as

probable are included in our business plans.

Risks are identified and assessed in the annual risk inventory for METRO AG and its

subsidiaries. This is based on a standardised risk catalogue. In addition, business model-specific

risks are supplemented locally.

We classify all risks according to standard criteria using quantitative and qualitative scales.

One part of the assessment focuses on the loss potential, which includes negative effects on our

business objectives. The key indicator here is EBIT. The other part of the assessment focuses on

the probability of occurrence. We break risks down into the following 4 risk categories:

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Loss potential

Significant

Major

Moderate

Minor

Probability of occurrence

Probable

Possible

Low

Unlikely

> €300 million

> €100−300 million

> €50−100 million

≤ €50 million

> 50%

> 25–50%

≥ 10–25%

< 10%

All risks are assessed with their potential impact at the time of the risk analysis and before

potential mitigating measures (presentation of gross risks). The central IT tool myGRC is used to

identify and assess risks and to document key control measures. We generally assess risks over a

prospective 1-year period; strategic risks cover at least the medium-term planning horizon of 3

years.

After the risks are identified and assessed by the companies, they are allocated by topic to

the various functions within METRO and validated by the respective corporate process owners,

usually the divisional managers; if necessary, they are then adjusted and supplemented. Long-

term risks and opportunities, for example related to climate change or political risks, are also

taken into account by the relevant functional experts. Based on these so-called functional risk

profiles, the Group Governance department prepares a proposal of consolidated risks. Before the

proposal is submitted to the Management Board of METRO AG for authorisation, it is first

reviewed and approved by the GRC Committee.

The consolidated risks considered significant by the Management Board of METRO AG are listed under ‘Description
of the opportunity and risk situation

page 94 ’.

Systematically identifying and communicating opportunities is an integral part of METRO’s

corporate management.

For this purpose, we conduct macroeconomic analyses, study relevant trends and evaluate

market, competition and location analyses. We also analyse the critical success factors of our

business models and the relevant cost drivers of our company. The Management Board of

METRO AG specifies the derived market and business opportunities as well as efficiency

enhancement potential in the context of strategic as well as short-term and medium-term

planning. It does so by engaging in a regular dialogue with the management of the group

companies and units at the central holding company. As a wholesale company, we pursue

market- and customer-driven business approaches in this process and continually review our

strategy to ensure long-term sustainable growth. The consolidated opportunities and risks are

presented jointly to the GRC Committee and the Management Board.

The responsibility for steering risks lies with the functionally and operationally responsible

persons within METRO. The ICS supports the group companies in fulfilling their responsibility to

manage process risks.

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Internal control system for financial and operational processes
METRO’s ICS defines group-wide minimum requirements for the design of the internal control

system for financial processes (for example accounting and tax processes) or operational

processes (such as purchasing processes and processes in the markets) for METRO AG and its

subsidiaries. Among others, these requirements cover the control design, control execution,

monitoring the effectiveness of controls and reporting on effectiveness analyses. The METRO

control framework, the local control design of the companies, the control execution and

documentation as well as the effectiveness analyses of the subsidiaries are also documented in

the central IT tool myGRC.

IFRS accounting guideline
A group-wide IFRS accounting guideline that is compulsory for all companies included in the

consolidated financial statements ensures the uniform METRO group-wide application of

accounting procedures. The guideline is periodically updated by the Corporate Accounting &

Controlling department. The management of each major group company is obligated to confirm

compliance with the guidelines in a formal declaration on each reporting date.

Accounting processes of companies included in the consolidated financial statements
The separate financial statements of the companies to be included in the consolidated financial

statements are generally prepared using SAP-based accounting systems (SAP FI). Clearly

assigned competencies and roles ensure clearly defined responsibilities for the individual

financial statement preparation activities. This unambiguous functional separation also prevents

potential conflicts of interest. Many group companies prepare their separate financial statements

on the basis of a centrally managed table of accounts using uniform accounting rules.

To avoid risks relating to non-compliance with accounting rules, deadlines or dates and to

document the work steps to be performed as part of the preparation of separate and

consolidated financial statements in accordance with IFRS, planning tools are available to assist

in monitoring the content and timing of work processes. The scheduling and monitoring of the

milestones and activities as well as the design of individual company internal controls necessary

for the preparation of separate financial statements are part of the responsibilities of the

respective company’s management.

Accounting processes for consolidation purposes
The consolidation of accounting-related data for the purpose of group reporting is performed by

a centralised consolidation system (CCH Tagetik). All consolidated METRO companies must work

within this system. It provides a uniform accounts table to be used by all consolidated

companies in accordance with the IFRS accounting guideline. Once they have been transmitted

from the separate financial statements to the consolidation system, they are subjected to an

automated plausibility review in relation to accounting-specific contexts and dependencies. Any

errors or warning messages generated by the system during this validation process must be

addressed by the person responsible for the separate financial statements before the data are

transmitted to the consolidation facility.

The processes and controls used in the preparation of the consolidated financial statements

include the completeness check of the consolidation group, verification of punctual, complete

and correct data submission, avoidance of undesirable data changes and a complete and error-

free execution of typical consolidation steps. The latter are subjected to system-based and

manual controls. The automated plausibility reviews (validations) apply to the consolidation

measures similarly as they are intended for the separate financial statement data.

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IT security
To warrant the security of the group’s information technology systems (IT), access to the

accounting-related IT systems is regulated. Access authorisations are centrally managed and are

subject to customary approval mechanisms. Generally, each company included in the

consolidated financial statements is subject to the regulations concerning IT security. These

regulations are summarised in an IT security guideline, with group-wide compliance being

monitored by the Internal Audit unit.

Reporting on RMS and ICS
All insights gained in the context of RMS, ICS and CMS reporting are included in the GRC

reporting. It provides an overall view of the opportunity and risk situation of the group and an

assessment of the effectiveness of the measures taken. The GRC report includes:

the assessment of the management of METRO AG regarding the effectiveness of the

governance management subsystems,

the opportunity and risk profile of the group, and

the recommendations on risk steering measures and the optimisation of the governance

approach.

The Management Board regularly informs the Supervisory Board and the Audit Committee about

issues relating to the management of opportunities and risks. Twice a year, the Supervisory

Board is provided with a written report on the organisation and focus of the RMS and ICS as well

as the current opportunity and risk situation.

In the event of sudden, serious risks to the net assets, financial position or earnings position,

an ad hoc reporting system is used to ensure that the Management Board of METRO AG receives

all necessary information directly and without delay.

Monitoring and improvement of the RMS and ICS
The Supervisory Board of METRO AG is responsible for monitoring the governance management

systems in accordance with § 107 Section 3 of the German Stock Corporation Act (AktG). GRC

reporting in particular enables the Supervisory Board to fulfil its duties. In accordance with the

requirements of the German Corporate Sector Supervision and Transparency Act (KonTraG) as

well as the provisions of § 317 Section 4 of the German Commercial Code (HGB), the external

auditor periodically assesses the company’s early-warning system. The results of this audit are

presented to the Management Board and the Supervisory Board.

Key elements of internal monitoring include effectiveness checks performed by Internal Audit

based on risk-oriented annual audit planning as well as self-assessments of the management

systems by the local management.

The Group Governance department has implemented monitoring controls for RMS and ICS,

which are performed by Group Governance and documented in the central IT tool myGRC. One

of these controls involves the annual systematic evaluation of all findings gathered throughout

the year, such as those arising from audit results, findings of external auditors and feedback

from users. In this way, the management systems are continuously improved.

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Description of the opportunity and risk situation

METRO has numerous opportunities for a sustainable positive development of its business. On

the other hand, there are risks that could impact us in reaching our goals. We have allocated the

METRO opportunity and risk portfolio to various subject groups. The Management Board of

METRO AG identified and assessed the following risks which are considered to be particularly

relevant for METRO. They are listed in the following overview:

Subject group

Environment

Corporate responsibility

Wholesale business

Real estate

Suppliers and products

Financials

Transactions

Legal and tax

No.

#10

#11

#12

Particularly relevant risks
2020/21

Risks related to Covid-19

Macroeconomic and political risks

Interruption of business activities

Environmental and social risks

Challenged business model

Real estate risks

Loss potential

Significant

Moderate

Major

Minor

Procurement risks (new)

Moderate

Quality risks

Financial risks

Transaction risks

Increasing trade regulations

Tax risks

Major

Moderate

Probability of
occurrence

Possible

Low

Possible

Probable

Possible

Low

Possible

Probable

Possible

Risk no. 7 ‘Procurement risks’ was included for the first time, as it represented a relevant risk for

METRO in the reporting period due to the loss potential and the probability of occurrence.

The risk factor ‘More stringent regulation pertaining to deferred compensation’ is reported

together with risk no. 11 ‘Increasing trade regulations’ this year due to its close affiliation.

Environment

Opportunities in connection with Covid-19
Despite the significant impact of the Covid-19 pandemic on our HoReCa customers and the

resulting decline in sales, there is a significant opportunity for METRO to emerge stronger from

the crisis. This is because METRO is distinguished from its competitors by a diversified business

model and strong capital resources. Especially smaller competitors that are solely based on

delivery sales are strongly affected by the Covid-19 pandemic due to the high HoReCa share of

sales and limited financial possibilities. METRO has the opportunity to actively consolidate the

market and gain market share. The pandemic has also changed consumer behaviour and

boosted the convenience trend, which has a positive impact on our Traders customer group and

Traders franchise business. METRO has also intensified strategic B2B partnerships with online

food retailers such as SberMarket (B2B2C) in Russia during this period and thus has the

opportunity to benefit from future growth of these companies. Digitalisation has been

accelerated by the Covid-19 pandemic and the importance of digital solutions for HoReCa and

Traders customers has increased accordingly. METRO offers its customers sustainable solutions

with economic added value through Hospitality Digital and METRO MARKETS. The goal is to

strengthen customer loyalty in the long term, to further expand customer relationships and

thereby increase the share of wallet.

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Risks related to Covid-19 (#1)
In financial year 2020/21, the ongoing global spread of Covid-19 continued to have a significant

impact on METRO’s operations. In particular, the government-imposed lockdown measures in H1

of the reporting period resulted in closures of HoReCa operations as well as restrictions in the

global supply chain. From an HR perspective, the risk is that employee infections can lead to

disruptions in logistics, warehouses and stores as well as work stoppages. We also hold real

estate in our portfolio and lease some of it to third-party tenants. Political measures and a

deterioration in the financial situation of tenants may lead to rent losses and, in addition to the

scenarios listed under risk no. 6 ‘Real estate risks’, to a deterioration in the financial situation of

tenants. Although the situation initially eased since the restrictions were relaxed in spring 2021,

virus variants occurring all over the world continued to pose a risk of additional pandemic

waves. As we entered the autumn and winter season, the number of cases has risen dramatically

again. Then again, the vaccination rate is increasing, making renewed large-scale lockdowns less

likely, especially for people who have been vaccinated and who have recovered from prior

infections. Consequently, we now assess the overall risk as less probable than in the previous

year and have arrived at an evaluation of the probability of occurrence as ‘possible’ (> 25–50%)

rather than ‘probable’ (> 50%) as in the previous year. In order to counter the risks in a timely

and comprehensive manner, we are systematically monitoring political measures and assessing

the current pandemic situation. To this end, we have set up a crisis team at group level, which is

responsible for the ongoing exchange of all relevant information and timely reporting.

Furthermore, we have initiated a variety of centralised and decentralised measures to support

the operational business. For example, we have launched campaigns to reopen the hospitality

businesses in several countries, provided advice and assistance for the implementation of

hygiene concepts, and we made digital solutions available, for example for guest registration in

the hospitality sector. To protect the employees, METRO has implemented comprehensive

hygiene concepts as well as testing and vaccination solutions. In the long term, there is a risk

that Covid-19 could lead to a systematic change in the hospitality operator structure through

market exits of financially weak restaurateurs and changed consumer behaviour. We are

continuously monitoring the corresponding trends in this area to ensure we can always quickly

react to changes.

Opportunities from the development of business and political conditions
An improvement in the economic and political environment worldwide or in countries where

METRO is present, as well as improvements in free trade, could have a positive impact on sales,

costs and earnings. METRO operates in a large number of markets where we could potentially

benefit from these developments. Opportunities could arise from a sustained positive

geopolitical and macroeconomic development, for example in the form of a recovery of foreign

exchange rates.

Macroeconomic and political risks (#2)
As a company with global operations, METRO depends on the political and economic situations

in the countries in which the group operates. The fundamental business environment can change

rapidly. Changes in political leadership, civil unrest, terrorist attacks or economic imbalances can

jeopardise METRO’s business. At the country level, the political and/or economic situations in

Russia, Ukraine, Turkey and Myanmar are particularly noteworthy for the reporting period. The

potential risks include the loss of property and real estate assets, changes in the exchange rate,

product restrictions, capital controls, regulatory restrictions and unexpected weakening of

demand. The global economy is continuing to be marked by tense trade relations between the

USA, Europe and China, as can be clearly seen in the expansion of the imposed punitive tariffs.

We consider it a risk. Nonetheless, a continuous monitoring of the economic and political

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developments and a review of our strategic objectives allow us to respond to these challenges in

a timely and appropriate fashion. Our international presence comes with the advantage of being

able to reduce the economic, legal and political risks as well as fluctuations in demand through

diversification.

For more information about our assessment of the development of the economic environment, see chapter 4 Report
on events after the closing date and outlook

page 85 .

Interruption of business activities (#3)
Our business operations could, for example, be compromised and/or interrupted by a failure of

IT systems, natural disasters or pandemics. Important business processes such as purchasing/

product ordering, marketing and sales rely on IT systems. Systems for online retailing must be

continuously available, as these systems are a prerequisite for permanent access, also outside

normal store opening times. As a result, the continuous availability of the infrastructure is a

critical factor in the development and implementation of our IT solutions. Systems that are

essential for business operations in the stores, especially checkouts, are largely self-contained

and can generally continue to be used for some time even during events such as network failures

or the failure of central systems. In case of partial network failures, they can automatically

reroute data or switch to redundant routes.

Centralised IT systems can be quickly restored to operational readiness if one or more servers

fail. Therefore, we use several central IT centres, which enables us to compensate for major

business interruptions or reduce their duration to the absolute minimum. We also have a disaster

recovery plan to restore IT centres in Germany after extended outages (for example outages

caused by fire, natural disasters or criminal actions).

A professional crisis management allows for a rapid crisis response and thereby ensures the

protection of our employees and customers. This includes evacuation plans, training measures

and specific instructions. We insure ourselves against the loss of tangible assets and any

impending loss of sales or profits resultant from business interruptions wherever it is possible

and reasonable.

Sustainability

Opportunities from sustainable business practices
Our company is more exposed than ever to economic, environmental, social and cultural

challenges. Similarly, we experience that sustainability is the key to transforming these

challenges into opportunities. METRO operates an active sustainability management system in

order to enshrine sustainability systematically and organisationally in its core business. Our

greatest leverage lies in expanding our sustainable product range. For example, we are helping

to meet the demand for healthy and conscious nutrition with redesigned products containing

less salt and sugar as well as organic products, alternatives to animal proteins and locally

sourced products. At the same time, we help reinforce local structures. These developments

have become even more pronounced during the Covid-19 pandemic. Our stakeholders evaluate

the sustainability efforts implemented by us, for example, through ratings.

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Environmental and social risks (#4)
The risk reported in the previous year under the name ‘Sustainability risks’ was renamed

‘Environmental and social risks’ to emphasise the focus on its content. Compared to the previous

year, the probability of occurrence for this risk has decreased from ‘probable’ (> 50%) to

‘possible’ (> 25–50%), while the loss potential has increased from ‘minor’ (≤ €50 million) to

‘major’ (> €100−300 million). The backdrop to the increased loss potential is the ascertainment

and broader applicability of human rights due diligence (HRDD) or, for Germany, the Act on

Corporate Due Diligence Obligations in Supply Chains. They contain regulations with regard to

human rights as well as environmental protection in the company’s own operations and in the

supply chain, and threaten potential fines and legal consequences in the event of

non-compliance. Further risks result from internationally increasing regulations on traceability

and transparency in the supply chain; again, non-compliance with these regulations may lead to

potential fines or a ban on the sale of the goods in question. To mitigate the risks, METRO has

established a corresponding social standards programme and traceability concept.

Furthermore, the consumption of energy and other natural resources affects our operating

costs and may have a negative impact on the environment, for example through the emission of

climate-damaging greenhouse gases. National regulations aimed at reducing the climate impact

of accumulated energy and fuel consumption could lead to higher energy price levels (for

example for electricity, gas, fuel) and thus to higher overall energy costs for METRO. In

particular, the levies under the German Combined Heat and Power Act (KWKG) and the German

Renewable Energy Sources Act (EEG) are increasing year after year. These additional price

components alone have caused our energy costs to rise compared to the previous year. We
continue to assess the risk of further increases in energy prices as a result of a possible CO2
price increase as probable, even if the probability of occurrence of environmental and social

risks overall has dropped to a ‘possible’ level due to the preventive measures. The climate target

previously defined by METRO will help to minimise this risk.

For more information about our social responsibility and environmental protection activities, see chapter 2
Principles of the group – 2.3 Combined non-financial statement of METRO AG

page 43 .

Wholesale business

Opportunities from innovations and digitalisation
METRO is focused on identifying and addressing current and future challenges of its customers

at an early stage in a constantly changing environment. In this case, innovations and

digitalisation are areas with excellent potential for realising increases in value. We are convinced

that the vigorous implementation of innovative ideas relating to the progressing digitalisation

will increasingly shape the future of the retail and wholesale industry. This may give rise to new

business models, which in turn may present a variety of opportunities.

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In order to exploit the opportunities derived from digitalisation and to realise synergies, we

are bundling our corresponding initiatives with the business units Hospitality Digital and METRO

DIGITAL. The focus on the core customer groups HoReCa and Traders is a key component of our

digitalisation strategy, which we use to provide our customers with digital solutions such as the

DISH (Digital Innovations and Solutions for Hospitality) platform. With Hospitality Digital, we see

significant opportunities to benefit from faster digitalisation in the HoReCa and Traders sectors

as well as in other business areas. The Covid-19 pandemic is motivating our customers to

accelerate their digitalisation efforts. With our METRO DIGITAL business unit, we continue to

digitalise our core business. METRO DIGITAL develops, optimises and supports all digital

solutions used by our customers, such as our apps METRO Companion or M-SHOP. METRO

DIGITAL is also developing internal digital solutions, for example to improve the efficiency of our

logistics processes. These digital solutions provide opportunities for METRO to set itself apart

from the competition.

Opportunities from customer focus
Customer focus and customer satisfaction are central elements of our strategy. In order to

continuously measure and consistently improve customer satisfaction, we have implemented the

Net Promoter Score across the board in 24 countries in which METRO is represented with

wholesale stores. Besides the purely quantitative measurement of the current satisfaction values,

suggestions from customers can be systematically recorded and evaluated. This allows further

potential for improving the shopping experience and supply as well as general consumer trends

to be identified. In line with our multichannel strategy, we are expanding our delivery sales and

strengthening our online activities. Our goal is to become the partner of choice for our

customers by offering METRO solutions that cover all aspects of their business. We are also

intensifying our competitive analyses. Our various strategic projects aim at further improving our

purchasing and sales processes and at creating additional value for our customers. The goal is to

ensure the ongoing value of assets, thereby countering the challenges faced by our business

model. As a wholesale specialist, we want to further increase our customer focus, accelerate our

growth, simplify our structures and increase the implementation speed. We are thus striving to

increase our overall operating performance.

Challenged business model (#5)
Particularly, the retail and wholesale trade in the markets in which we operate is characterised

by rapid changes and fierce competition. A significant risk is consumers’ fluctuating propensity

to consume. Changes in consumer behaviour and customer expectations pose additional risks,

among others, in the face of demographic change, rising competition and increasing

digitalisation. If we fail to adequately address our customers’ needs and price developments or if

we miss trends with regard to our assortments or appropriate sales formats and new sales

channels, this could potentially impede the development of our sales and income and also

jeopardise our objectives in terms of growth and profitability. This may result in impairment

losses on intangible assets or financial assets. In this context, after the completion of the

disposal of the hypermarket business, the overall risk in terms of extent of damage has been

reduced from material to significant.

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We counteract these risks in various ways. On the one hand, we develop country-specific

value creation plans, which are geared to local conditions and customer needs and are

supported and monitored in their implementation by our operating partners and international

working groups (federations). On the other hand, we are actively working on expanding our

business model from transactional sales of goods to a holistic partnership that addresses all the

needs of professional customers. Examples include the platform business of METRO MARKETS,

the numerous initiatives for the digitalisation of our customers bundled on dish.co and the

financial services under GastroFinanz.

Real estate

Opportunities from increase in value
We see potential for value increases in possible development projects for our existing real estate

assets as well as in improved facility management.

Real estate risks (#6)
Loss of rental income caused by insolvencies of third-party tenants or statutory regulations in

the course of pandemics as well as vacancies due to unused space can lead to the risk of an

impairment of owned locations or the rights-of-use of rental locations. Furthermore, there are

increased risks with regard to key anchor tenants. However, we were able to reduce them

compared to the previous year due to an agreement we reached on keeping the lease term.

Consequently, the risk in terms of the loss potential has decreased from ‘moderate’ (>

€50−100 million) to ‘minor’ (≤ €50 million), while the probability of occurrence has increased

from ‘possible’ (> 25–50%) to ‘probable’ (> 50%). Moreover, delayed repair and maintenance

work could lead to infringements and real estate impairments as well as reputational damage.

We mitigate these risks with strategic and operational real estate management. To this end, we

regularly evaluate properties in terms of value and income and perform projected investment

planning. The safety and health of customers, suppliers and employees could be endangered by

deficiencies in the properties. We take decisive action to prevent potential accidents and

damage to health, thus ensuring a safe and healthy environment. In addition, we conduct risk

assessments and specify clear sets of rules and procedures. We support implementation through

frequent training, internal controls such as regularly scheduled safety and occupational safety

inspections as well as external controls such as stability inspections.

Suppliers and products

Opportunities from responsible trading
Not only for us, but also for more and more customers, quality and safety, the environmental and

social sustainability of the products we offer and their production process are playing an

increasingly important role. We aim to ensure socially acceptable working conditions within our

sourcing channels. For this purpose, METRO has a group-wide purchasing policy for a

sustainable supply chain and procurement management that applies to all products.

For more information about our social responsibility and environmental protection activities, see chapter 2
Principles of the group – 2.3 Combined non-financial statement of METRO AG

page 43 .

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Opportunities from higher own-brand penetration
Own brands are a central part of METRO’s strategy to increase the success of our customers. By

offering own brands, we can provide high quality at relatively low prices, thus simultaneously

increasing our customers’ profitability as well as our own. Potential economic constraints and

increased price pressure on our customers, for example as a result of the Covid-19 pandemic,

could increase demand for own brands and thus have a positive effect on METRO’s profitability.

Procurement risks (#7, new)
Procurement risks were included in the opportunity and risk portfolio for the first time this year.

Inflation, supply chain disruptions as well as a weakened negotiating position due to the

reduction of the group volume may lead to a negative purchase price development. We assess

the risk as ‘moderate’ (> €50−100 million) and ‘possible’ (> 25–50%). Moreover, insolvencies,

production downtimes (for example energy failure or lack of raw materials) or breaches of

contract by suppliers may lead to product unavailability and thus to sales losses. In order to

mitigate the risks, METRO is launching projects to promote bundled purchasing activities by the

national subsidiaries and thus gain more beneficial prices. Furthermore, we continuously monitor

and evaluate the performance of our suppliers and have access to alternative suppliers,

especially for important products. When we renegotiate expiring contracts, we try to implement

agreements that compel the supplier to be sufficiently prepared so that supply continuity can

even be ensured in the event of force majeure.

Quality risks (#8)
As a wholesale company, METRO depends on external producers and service providers.

Defective or unsafe products, exploitation of the natural environment, inhumane working

conditions or infringements against our compliance standards could potentially cause major

damage to the reputation of METRO and pose a lasting threat to the company’s success. We

therefore continuously audit our suppliers to assess their adherence to METRO’s stringent

procurement and compliance standards. These include the food safety and quality standards

recognised by the Global Food Safety Initiative (GFSI), such as the International Food Safety

Standard and the GLOBALGAP certification for agricultural products. They contribute to the

safety of foods on all cultivation, production and sales levels. In order to be able to operate as a

METRO own-brand supplier on a preliminary basis without a recognised and valid audit

certificate, the supplier must pass a special test (METRO Assessment Solution) conducted by an

accredited certification body. Violations of conditions can lead to exclusion from our supplier

network or, in the case of unacceptable production methods, to a product being blacklisted. If

suppliers do not provide a corresponding certificate, it jeopardises the due diligence of METRO

towards the customer. Potentially non-safe products on the market which are unsuitable for

human consumption or use or even harmful to health represent a very high reputation risk and

comprise the threat of lasting damage to customer relationships. Should a quality incident occur

despite these measures, the process steps for resolving interruptions and incidents described in

our manual set out the procedure to react to the incident in the interest of our customers. We

also continuously identify potential improvements to our quality assurance systems and

implement them.

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Financials

Financial risks (#9)
Unexpected deviations from the budget or the outlook could potentially result in METRO

missing its budget targets and making wrong business decisions. This could lead to unexpected

negative financial consequences. We therefore place high priority on measures designed to

mitigate these risks. In order to minimise risks, we are consistently implementing strategic

measures aimed at improving our earnings. We support the operational units in their proactive

implementation of the strategy by providing them with value creation plans. We also mitigate

risks by conducting effective internal controls, close interlocking of strategic planning and the

budgeting process, very close monitoring of budget compliance as well as strong involvement of

the supervisory bodies. The fact that our financial year differs from the calendar year allows us a

high degree of planning certainty at an early stage, with the profitable Christmas quarter being

the first quarter of our financial year. Furthermore, potential insolvencies of commercial partners

and customers represent a financial risk. In order to minimise the risk of bad debts, we monitor

the ratings and credit spreads of counterparties on a daily basis – insofar as they are available –

in addition to the receivables portfolio. At the same time, we reduce the default risk to a

minimum by distributing cash pooling among several parties (diversification) and by using

standard scoring and limit authorisation tools.

For more information about financial risks and their management, please see the notes to the consolidated financial
statements in No. 43 – Management of financial risks

page 238 .

Transactions

Opportunities from portfolio simplification and efficiency improvements
The country portfolio is regularly reviewed with regard to the feasibility of a local market

leadership and the attractiveness of the respective markets. In this context, in the past financial

year METRO decided to discontinue its business activities in Japan and Myanmar. Further

portfolio adjustments cannot be ruled out in the future. We have successfully completed

significant company disposals (Galeria Kaufhof, Real, majority stake in METRO China) in recent

years and have extensive experience in this regard. In the future, METRO will also focus on

investments to strengthen its wholesale business and expand market shares. The focus on

wholesale could lead to improved workflows along the value chain faster than expected and

could have a positive effect on our business development through an increase in operating

efficiency. Collaborations (even if they are purely contractual) can help us reduce operational

cost and give our customers access to innovative food products.

Opportunities from company acquisitions
Great potential for increases in value may arise from acquisitions, particularly in business

segments of strategic importance. Following the completed disposals of Real and the majority

stake in METRO China, METRO’s liquidity situation is excellent and provides room for company

acquisitions. We see opportunities in the further expansion of our core business, mainly through

acquisitions in the delivery business, as well as in reinforcing our activities in related B2B areas,

e.g. in e-commerce and marketplace operations. METRO made various acquisitions in the past

financial year, including Davigel (Spain) and Aviludo (Portugal) as well as AGM (Austria, in

competition law examination procedure). The existing minority interests held by METRO offer

the opportunity for additional increases in value if, for example, start-up companies were to

develop better than expected. We also want to solidify and expand our leading position in

numerous markets. We expect that the consolidation of the wholesale stores in many of our

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portfolio countries will be intensified by the Covid-19 pandemic. Our goal here is to gain market

share and, where appropriate, to take over individual locations of competitors and thus actively

advance market consolidation.

Transaction risks (#10)
The risk from the previous year ‘Risks from completed transactions’ was renamed to ‘Transaction

risks’. This year, it also includes risks from ongoing transactions in connection with the

acquisition of the AGM stores in Austria (in competition law examination procedure).

Furthermore, it continues to contain the risks from completed company acquisitions and

disposals, such as the risks associated with the disposal of the hypermarket business and the

disposal of the minority interest in METRO China as well as other subsequent liability risks from

completed sales of companies from previous years. We assess the remaining risks as significant

and probable. In connection with the disposal of the hypermarket business, the risks mainly

consist of residual costs that will continue to be incurred after the sale and may not be

sufficiently offset by proceeds from continuing operations to cover these costs, and the

utilisation of guarantees. Examples of residual costs are the loss of purchasing synergies and the

temporary underutilisation of METRO LOGISTICS, which will only be realised in the medium term

due to transitional agreements. During this transitional period, the development of third-party

business is planned in order to utilise the capacity of METRO LOGISTICS.

The demerger of the former METRO GROUP was concluded on 13 July 2017 with the initial

listing of METRO AG shares on the stock exchange. The former METRO GROUP split into a

wholesale specialist (the new METRO AG) and a company focused on consumer electronics and

services (CECONOMY AG, formerly METRO AG). The demerger may be subject to additional

legal risks, adding to the tax risks inherent in the implementation. In detail, these risks are:

continuing liability for all liabilities of CECONOMY AG occurring on the effective date of the

demerger/spin-off for a period of 5 years.

We are continuously monitoring the financial position of CECONOMY AG. By way of legal

defence strategies, we are prepared for any potential complaints.

Legal and tax

Increasing trade regulations (#11)
This year, the risk also includes risks from the more stringent regulation pertaining to deferred

compensation, which were listed separately in the previous year. The European Union and

national governments are increasingly adopting or amending regulations to regulate trade that

could affect our business. The implementation of the Unfair Trading Practices directive will

weaken our negotiating position. Further restrictions on trade practices through local law are

expected in EU countries in this context. In the Corporate Public Policy department, we collect,

discuss and analyse important social, regulatory and political issues in order to represent our

interests at the political level through responsible lobbying. We take increasing legal

requirements into account by regularly revising regulations. Besides purchase price agreements

for goods we resell, we enter into agreements on so-called subsequent remuneration with the

suppliers. They include purchasing conditions, for example in the form of product-specific

deferred rebates, cost reimbursements or payments for services such as specific customer data

analyses. For the last few years, we have observed that agreements on subsequent

compensation between buyers and suppliers have been subjected to increased regulatory

restrictions. This is mainly the case in Eastern Europe, but also in other countries in which

METRO operates. Russia, in particular, is affected by a decline in subsequent compensations.

Some restrictions mean that certain conditions are completely prohibited. At the same time,

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antitrust law is used to regulate conditions to the detriment of wholesalers and retailers, as it is

presumed that they have market power.

We continuously and systematically monitor the risks arising from increasing regulation

regarding subsequent compensation. We address these regulation trends using a preventative

approach by adapting our contractual relationships with suppliers in the relevant jurisdictions

and/or in relation to certain product categories to the respective developments. This allows us

to ensure that any subsequent benefit arrangement complies with the applicable laws at all

times. We also take care to appropriately provide for the respective limitation periods under civil

law. As part of an ongoing monitoring programme, we analyse historical condition structures

and update the current remuneration agreements based on these findings where it is deemed

necessary. Without active management, there would be a risk that added value in the form of

subsequent compensation in selected product groups and/or individual countries could no

longer or only partially be collected as a result of changes to the regulatory framework. This

could have a corresponding negative impact on the total comprehensive income of our

company.

For more information about legal issues, see the notes to the consolidated financial statements in No. 48 –
Remaining legal issues

page 250 .

Tax risks (#12)
Tax risks can primarily arise in relation to the assessment of financial matters by the tax

authorities (including transfer price issues). Additional risks may result from differing

interpretations of sales tax (VAT) regulations. Another aspect is the potential expiry of existing

tax loss carry-forwards in the event of an acquisition of more than 50% of the shares in

METRO AG by an anchor shareholder. Due to a lack of quantifiability in terms of probability of

occurrence, the risk is not included in the overall assessment of tax risks this year. In order to

identify and minimise tax risks at an early stage, METRO AG has issued a group tax guideline,

which is continuously monitored by the Corporate Group Tax department to ensure that it is up

to date and properly implemented. These risks are regularly and systematically examined and

assessed. Increasing tax requirements are taken into account in the regular revision of

regulations. Moreover, an internal control system for the sales tax process was established in

financial year 2019/20 and initially implemented for German companies. The roll-out process to

other national subsidiaries was also completed in the reporting period.

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Management’s overall assessment of the opportunity and risk situation

The Management Board and the Supervisory Board of METRO AG are regularly informed about

the company’s situation in terms of opportunities and risks. To evaluate the present risk

situation, we did not examine opportunities and risks in isolation. Instead we analysed and rated

the interdependencies between risks according to probability and impact. Our assessment

indicates that the overall risks can be borne or managed. For a period of 1 year after the closing

date, the identified individual and cumulative risks do not represent any risks in the form of

possible illiquidity or over-indebtedness. We are confident that METRO’s earnings performance

offers a solid foundation for the sustainable positive development of our business and the

utilisation of numerous opportunities. The Management Board of METRO AG currently does not

expect any fundamental change in the opportunities and risk situation.

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6 REMUNERATION REPORT

The remuneration report describes the remuneration system for the Management Board and the

Supervisory Board in accordance with the statutory provisions of the German Commercial Code

and the recommendations of the German Corporate Governance Code. It depicts the

remuneration amount of the members of the Management Board and the Supervisory Board in

individualised form and according to remuneration components. The report also complies with

the applicable accounting standards for capital market-oriented companies according to GAS

and IFRS.

The Supervisory Board of METRO AG decides on the remuneration system for the

Management Board and reviews it on a regular basis. The Presidential Committee, chaired by the

Chairman of the Supervisory Board, prepares the proposed resolutions for the full Supervisory

Board. The remuneration system which applies to financial year 2020/21 was approved by the

Supervisory Board of METRO AG in financial year 2019/20 at its meeting on 24 September 2020

and submitted to the Annual General Meeting on 19 February 2021 for approval. The

remuneration system was approved by the Annual General Meeting with 90.15% of the votes

cast.

The remuneration system for members of the Management Board

The remuneration system for the Management Board of METRO AG, which has been in force

since 1 October 2020, is geared to benefit the efficient, long-term progress of the company. In

addition to promoting the strategic objectives of the company, it also fosters responsible action

and sustainable profitable growth by incorporating the interests of shareholders, customers,

employees and other stakeholders in the variable remuneration.

The agreed remuneration of the members of the Management Board is made up of

a fixed salary,

a short-term variable remuneration,

a long-term variable remuneration,

a pension plan as well as

other non-monetary and supplemental benefits.

The fixed remuneration components make up 36% to 47% of the target total remuneration of a

member of the Management Board, while the variable remuneration components comprise the

remaining 53% to 64%. The target total remuneration is defined as the sum of all fixed and

variable remuneration components in the event of 100% target achievement. The supplemental

benefits are reflected with the theoretical maximum amount. The variable remuneration consists

of short-term incentive and long-term incentive at a ratio of approximately 40: 60.

The focus of the group’s operational management is on the value drivers that have a direct

impact on the company’s medium- and long-term targets and are directly related to the

strategy. Thus, sales growth as a sales indicator, EBITDA as an earnings indicator and Return on

Capital Employed (RoCE) as a profitability indicator form the basis for the short-term variable

remuneration of the Management Board. In order to account for the individual performance

differentiation and the overall work of the Management Board, priority topics defined by the

Supervisory Board of METRO AG are included in the short-term variable remuneration. In an

effort to ensure the sustainable, long-term development of the company, the long-term variable

remuneration is based on the share price development as well as earnings per share.

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THE REMUNERATION SYSTEM FOR MEMBERS OF THE MANAGEMENT BOARD

Total remuneration

Variable remuneration

Fixed salary

Short-term
variable
remuneration

Long-term
variable
remuneration

Non-monetary
and supplemental
benefits

Annual fixed
salary

Schematic diagram.

Based on sales
(40%), earnings
(40%) and
profitability or
cash flow (20%)

Performance cash
plan with TSR and
EPS components

For example,
pensions,
company cars

Total remuneration and the individual remuneration components are geared appropriately to the

responsibilities of each individual member of the Management Board, his or her personal

performance and the company’s economic situation. They fulfil the legal stipulations regarding

customary remuneration. Furthermore, it is ensured that the remuneration does not exceed a

customary remuneration in the market without special reasons.

The remuneration amount for each member of the Management Board is individually limited –

in each case with regard to the individual remuneration components as well as the total payout

cap. The theoretically achievable maximum remuneration specified in the remuneration system is

generally limited to €8.5 million for the Chairperson of the Management Board and to €5 million

for an ordinary member of the Management Board. However, the individual remuneration

thresholds granted in relation to a financial year are below these maximum limits for the

members of the Management Board and are set as follows for financial year 2020/21: for

Dr Steffen Greubel at €6,271,600, for Christian Baier at €4,516,000, for Andrea Euenheim at

€3,249,273, for Rafael Gasset at €4,040,000 and for Eric Poirier at €4,065,000. For Olaf Koch,

whose employment contract ended on 31 December 2020, the maximum amount in relation to a

full contract year was €8,034,800. The upper cap limits for the variable remuneration

components and the supplemental benefits including post-employment benefits are

contractually agreed as follows:

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Target amount
of short-term
variable
remuneration
for financial
year 2020/21
(the payout is
capped at
twice the
target amount)

Target amount
of long-term
variable
remuneration
for financial
year 2020/21
(the payout is
capped at two
and a half
times the
target amount)

Upper cap for
the assumption
of
supplemental
benefits for
financial year
2020/21
(including
post-
employment
benefits)

840,000

341,600

600,000

900,000

266,000

411,000

618,000

530,000

1,120,000

800,000

230,190

260,000

285,000

394,800

€ p.a.

Dr Steffen Greubel1

Christian Baier

Andrea Euenheim

Rafael Gasset

Eric Poirier

Olaf Koch2

1 Member of the Management Board since 1 May 2021.
2 Member of the Management Board until 31 December 2020.

Fixed salary
The fixed salary is contractually agreed with the members of the Management Board and is paid

out in monthly instalments.

Short-term variable remuneration (short-term incentive, STI)
The short-term incentive rewards the operational development of the company based on the

success in the respective financial year. A target amount for the short-term incentive is

contractually defined for each member of the Management Board.

Success is based on 2 parameters. The financial success parameters are aimed at profitable

growth. The strategic performance parameters are based on a highly focused list of objectives

consisting of group targets and individual departmental targets of the respective member of the

Management Board. They also specifically include the company’s environmental/

social/governance (ESG) targets.

SHORT-TERM INCENTIVE (STI)

Target amount

Schematic diagram.

Performance targets

Financial company
performance
0−200%

Strategic performance
parameters
0.8–1.2

Payment
(payout cap: 200% of
the target amount)

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Financial performance parameters
The short-term incentive for financial year 2020/21 is based on the following financial

performance parameters of the group:

like-for-like sales development (sales growth in local currency related to a comparable area or

a comparable portfolio of stores or distribution concepts such as delivery and online

business), at 40%,

exchange rate-adjusted earnings before deduction of interest, taxes, depreciation/

amortisation (EBITDA), excluding real estate transactions and transformation costs, at 40%,

exchange rate-adjusted Return on Capital Employed (RoCE), excluding real estate

transactions and transformation costs, at 20%,

in each case based on the target amount.

Instead of one of the financial performance parameters applicable for financial year 2020/21,

the Supervisory Board may also apply any of the other financial performance indicators listed in

the combined management report and the group management report for subsequent financial

years; for example, this may be the case if it is convinced that the alternative parameter is more

suitable as a performance indicator for the long-term development of the company.

For more information about the key performance indicators, see chapter 2 Principles of the group – 2.2 Management
system page 41 .

Generally, target values for each of the 3 financial performance parameters are set by the

Supervisory Board before the beginning of the financial year. The targets are based on the

budget plan, which requires the approval of the Supervisory Board. To determine whether a

target has been achieved, the Supervisory Board defines a floor/entry hurdle for each

performance target and a target value for 100% target achievement. A factor is allocated to the

specific degree of target achievement for each performance target:

If the degree of target achievement is 100%, the factor is 1.0.

If the degree of target achievement is lower or equal to the floor/entry hurdle, then the factor

is 0.0.

In the case of intermediate values and values over 100%, the factor for target achievement is

calculated using linear interpolation and/or extrapolation.

In financial year 2020/21, there was an exceptional adjustment of the financial performance

parameter target values during the year in connection with the Covid-19 pandemic and the

associated regulatory measures and restrictions for the HoReCa sector.

To determine whether the EBITDA target has been achieved, the Supervisory Board is

authorised to adjust the EBITDA for any possible impairment losses on company value.

The overall target achievement of the financial performance parameters is calculated from the

determined target achievement factors for each of the financial performance targets. The

weighted arithmetic mean of the individual factors is the overall target achievement factor,

which is limited to a factor of 2.0.

Strategic performance parameters
Generally before the beginning of each financial year, the Supervisory Board determines

department-specific and joint priority topics for each member of the Management Board. The

topics are related to the current development of the company and aligned with the strategic

orientation. Clearly defined, fundamentally measurable criteria ensure that they can be properly

assessed. For example, these priority topics include implementation of ongoing large-scale

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projects at Management Board level and, in particular, ESG targets such as customer

satisfaction, employee satisfaction, succession planning, diversity and sustainability. The factor

determined from the target achievement of the strategic performance parameters can be

between 0.8 and 1.2 and accordingly reduces or increases the determined payout amount based

on the financial performance parameters.

Determination of the payout amount
The payout amount of the short-term incentive for the members of the Management Board is

calculated by multiplying the target amount by the factor of the overall target achievement of

the financial performance parameters and the factor determined for the strategic performance

parameters. The payout amount of the short-term incentive is limited to a maximum of 200% of

the individually determined target value (payout cap).

An additional condition for the payout of the short-term incentive is that positive free cash

flow it generated. Thus, payout of the short-term incentive never occurs if the free cash flow for

the financial year in question is negative, unless the negative free cash flow is based on a plan

approved by the Supervisory Board.

The short-term incentive of the members of the

Management Board is generally payable 4 months

after the end of the financial year, but not before

approval of the annual and consolidated financial

DETERMINATION OF STI TARGET ACHIEVEMENT

statements by the Supervisory Board for the

200%

financial year for which the incentive was agreed.

When a member of the Management Board

leaves, the short-term incentive for this financial

year is determined pro rata temporis and paid out

as outlined in the system.

Long-term variable remuneration (long-term
incentive, LTI)
The long-term incentive reinforces the sustainable

development of the company and sets incentives

for a sustainable, long-term increase in the value

of the company. It also considers the internal and

external value development over a period of

several years as well as the interests of the

shareholders and other stakeholders associated

150%

100%

50%

The payout
corresponds to
the target amount
of the short-term
incentive

0.50

1.00

1.50

2.00

2.50

Overall target achievement,
including performance factor

with the company. A target amount for the long-term incentive is contractually defined for each

member of the Management Board.

Performance cash plan (from financial year 2020/21 onwards)
Since financial year 2020/21, the long-term incentive has been structured as a performance cash

plan. The tranches to be granted annually have a term of 4 years, which begins on 1 October of

the financial year for which the tranche is granted (grant year). The cut-off date for granting of

the tranches is the 21st stock exchange trading day after the Annual General Meeting in the

grant year. In case of employment termination of a member of the Management Board before

the end of the term of a tranche, separate payment regulations have been agreed.

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The performance cash plan is based on the achievement of 2 performance targets:

the relative development of the total shareholder return (TSR) of the METRO ordinary share,

each with a weighting of 50% in comparison to the MDAX and a peer group of competitors,

at 60%,

the basic earnings per share (Earnings per Share – EPS) against a defined absolute target

value, at 40%.

LONG-TERM INCENTIVE (LTI) – PERFORMANCE CASH PLAN

Target
amount

ø share
price

Number of
allocated
performance
shares

Schematic diagram.

Performance period
(3 years)

Final number of performance
shares based on target
achievement

50% TSR
(compared
to the MDAX
and defined
competitors)

50% EPS

Final number
of
performance
shares

ø share
price plus
dividends

Payment in
cash

(payout cap:
250% of the
target
amount)

FY n

FY n + 1

FY n + 2

FY n + 3

TSR component: the target achievement factors of the TSR component are measured by the

development of the total shareholder return of the METRO ordinary share in the TSR

performance period relative to a defined benchmark index and to a peer group of competitors –

half against the development of the MDAX TSR and half against the development of the TSR of a

defined peer group of competitors over the same period as the METRO TSR. The TSR value of

the peer group of the competitors is determined individually for the members of the peer group

and then the median is determined. The competitor peer group is composed of the following

companies: Bidcorp, Marr, Eurocash Group, Performance Food Group, US Foods, Sysco and

Sligro. Only companies that are listed for the entire performance period are included in this

group. If TSR values are available for fewer than 6 companies in this peer group, then the

METRO TSR will be exclusively compared with the MDAX TSR – and the comparison with the

peer group will not apply.

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For the TSR component, the Supervisory Board usually establishes a floor/entry hurdle and a

TSR target value for the 100% target achievement at the beginning of the financial year in which

the tranche of the performance cash plan is granted.

To determine target achievement, the Xetra closing prices of the METRO ordinary share are

determined over a period of 20 consecutive stock exchange trading days immediately after the

company’s Annual General Meeting in the year in which the tranche is granted. The arithmetic

mean calculated from this figure is called the starting share price. The performance period for

this component begins on the 21st trading day after the Annual General Meeting. 3 years after

the starting share price has been determined and the tranche has been issued, the Xetra closing

prices of the METRO ordinary share are again determined over a period of 20 consecutive stock

exchange trading days immediately after the Annual General Meeting. This is used again to

establish the arithmetic mean, the so-called closing share price. The TSR is determined as a

percentage on the basis of the change in the METRO ordinary share price and the total amount

of hypothetically reinvested dividends throughout the performance period in relation to the

starting share price.

The resulting METRO TSR is compared to the TSR

of the 2 peer groups in the performance period

determined in the same way. A factor is allocated

to the specific degree of target achievement:

DETERMINATION OF TARGET ACHIEVEMENT
FOR TSR PERFORMANCE

If the degree of target achievement at the end

of the performance period is 100%, the factor

is 1.0. This requires an outperformance of

5 percentage points compared to the peer

groups.

If the degree of target achievement is lower or

equal to the entry hurdle, then the factor is 0.0.

In the case of intermediate values and values

over 100% up to a maximum of 300%, the

factor for target achievement is calculated

using linear interpolation and/or extrapolation.

300%

250%

200%

150%

100%

50%

EPS component: for the EPS component, the

Supervisory Board generally decides at the

beginning of the financial year in which the

tranche of the performance cash plan is granted

-45
percent-
age
points

-20
percent-
age
points

5
percent-
age
points

30
percent-
age
points

55
percent-
age
points

80
percent-
age
points
TSR performance

on a floor/entry hurdle for target achievement and an EPS target value for 100% target
performance for the 3rd financial year of the EPS performance period. A factor is allocated to
the specific degree of target achievement:

If the degree of target achievement at the end of the performance period is 100%, the factor

is 1.0.

If the degree of target achievement is lower or equal to the entry hurdle, then the factor is

0.0.

In the case of intermediate values and values over 100% up to a maximum of 300%, the factor

for target achievement is calculated using linear interpolation and/or extrapolation.

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Determination of the payout amount: the amount

to be paid out at the end of the tranche term is

determined from the target achievement factors

of the TSR and EPS components based on the

target amount attributable to the performance

target in each case. The target achievement factor

for each individual component is limited to a

maximum of 3.0. The payout amount is limited to

a maximum of 250% of the individually

determined target amount (payout cap).

The tranches of the performance cash plan are

paid out in the month following the end of the

term, but not before all annual and consolidated

financial statements for the financial years of the

EPS performance period have been approved by

the Supervisory Board.

With the introduction of the performance cash

plan, the so-called share ownership guidelines

were unlinked from the long-term incentive with

DETERMINATION OF EPS PERFORMANCE
TARGET ACHIEVEMENT

300%

250%

200%

150%

100%

50%

1.00

2.00

3.00

4.00

EPS performance

the intent to increase clarity and reduce complexity. The guidelines were contractually agreed in

a separate agreement.

Performance share plan (financial years 2016/17 to 2019/20)
The annually granted tranches of the performance share plan and their associated performance

targets are generally based on a multi-year assessment. The performance period is usually 3

years. In case of employment termination of a member of the Management Board before the end

of the term of a tranche, separate payment regulations have been agreed.

Each member of the Management Board was initially allocated conditional performance

shares. Their amount corresponds to the quotient of the individual target amount and the

arithmetic mean of the share price of the METRO ordinary share upon allocation. The decisive

factor here was the average Xetra closing prices of the METRO ordinary share over a period of

40 consecutive stock exchange trading days immediately after the Annual General Meeting of

the company in the year of the allocation.

The performance period ends after the 40th stock exchange trading day following the Annual

General Meeting in the 3rd financial year following the issuance of the tranche. After the

performance period of a tranche, the final number of performance shares is determined. That

number depends on the achievement of 2 performance targets, each with a 50% weighting in

the target amount of the performance share plan:

the relative development of the total shareholder return (TSR) of the METRO ordinary share,

each with a 50% weighting in comparison to the MDAX and a peer group of competitors,

the basic earnings per share (EPS) against a defined absolute target value.

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LONG-TERM INCENTIVE (LTI) – PERFORMANCE SHARE PLAN

Target amount

Schematic diagram.

Performance targets

60% TSR
(compared to the
MDAX and defined
competitors)

40% EPS

4-year term

Payment in cash
(payout cap:
250% of the
target amount)

TSR component: the target achievement factor of the TSR component is measured by the

development of the total shareholder return of the METRO ordinary share in the performance

period relative to a defined benchmark index and to a defined peer group – half against the

development of the MDAX TSR and half against the development of the average TSR of a

defined peer group of competitors over the same period as the METRO TSR. The TSR value of

the peer group of the competitors is determined individually for the members of the peer group

and then the arithmetic mean is established. The competitor peer group is composed of the

following companies: Bidcorp, Bizim Toptan, Marr, Eurocash Group, Performance Food Group, US

Foods, Sysco and Sligro. Only companies that are listed for the entire performance period are

included in this group. If TSR values are available for fewer than 6 companies in this peer group,

then the METRO TSR will be exclusively compared with the MDAX TSR – and the comparison

with the peer group will not apply. For the tranche of the performance share plan granted in

financial year 2019/20, the peer group of competitors was reduced by the company Bizim

Toptan for the TSR component; moreover, the median instead of the arithmetic mean was used

to determine the TSR value for the peer group.

For the TSR component, the Supervisory Board usually established a floor/entry hurdle and a

TSR target value for the 100% target achievement at the beginning of the financial year in which

the tranche of the performance share plan was granted.

To determine target achievement, the Xetra closing prices of the METRO ordinary share were

determined over a period of 40 consecutive stock exchange trading days immediately after the

company’s Annual General Meeting in the year in which the tranche was granted. The arithmetic

mean calculated from this figure is called the starting share price. The performance period for
this component began on the 41st trading day after the Annual General Meeting. 3 years after
the starting share price is established and the tranche is issued, the Xetra closing prices of the

METRO ordinary share are again determined over a period of 40 consecutive stock exchange

trading days immediately after the Annual General Meeting. This is used again to establish the

arithmetic mean, which is known as the closing share price. The TSR is determined as a

percentage on the basis of the change in the METRO ordinary share price and the total amount

of hypothetically reinvested dividends throughout the performance period in relation to the

starting share price.

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The resulting METRO TSR is compared to the TSR of the 2 peer groups in the performance

period determined in the same way. A factor is allocated to the specific degree of target

achievement:

If the degree of target achievement at the end of the performance period is 100%, the factor

is 1.0. This requires an outperformance of 5 percentage points compared to the peer groups.

If the degree of target achievement is lower or equal to the entry hurdle, then the factor is

0.0.

In the case of intermediate values and values over 100% up to a maximum of 300%, the factor

for target achievement is calculated using linear interpolation and/or extrapolation.

EPS component: for the EPS component, the Supervisory Board generally decided at the

beginning of the financial year in which the tranche of the performance share plan was granted

on a floor/entry hurdle for target achievement and an EPS target value for 100% target
performance for the 3rd financial year of the performance period. A factor is allocated to the
specific degree of target achievement:

If the degree of target achievement at the end of the performance period is 100%, the factor

is 1.0.

If the degree of target achievement is lower or equal to the entry hurdle, then the factor is

0.0.

In the case of intermediate values and values over 100% up to a maximum of 300%, the factor

for target achievement is calculated using linear interpolation and/or extrapolation.

Determination of the payout amount: the target achievement factors of the EPS and TSR

components are used to form the arithmetic mean that establishes the overall target

achievement factor. This is used to determine the target number of performance shares, which

results in a cash payment at the end of the performance period of a tranche:

If the total target achievement factor for both components is 1.0, then the target number of

performance shares equals the number of conditionally allocated performance shares.

If the total target achievement factor is 0.0, then the number of performance shares

decreases to 0.

For all other target achievements, the target number of performance shares is determined by

means of linear interpolation or extrapolation.

The target number of performance shares is limited to a maximum of 300% of the conditionally

allocated number of performance shares.

The payout amount is calculated per performance share as follows: 3 years after the starting

share price has been determined and the tranche has been issued, the Xetra closing prices of the

METRO ordinary share will be determined over a period of 40 consecutive stock exchange

trading days immediately following the Annual General Meeting. This is used to form the

arithmetic mean and all the dividends paid during the performance period for the METRO

ordinary share are added to it. This so-called share factor is multiplied by the number of

calculated performance shares and establishes the gross payout amount.

The payout amount is limited to a maximum of 250% of the individually determined target

amount (payout cap).

The tranches of the performance share plan will be paid no later than 4 months after the

Annual General Meeting that decides on the appropriation of the balance sheet profit of the last

financial year of the performance period, but not before the approval of all annual and

consolidated financial statements for the financial years of the performance period by the

Supervisory Board.

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Share ownership guidelines
As a prerequisite for the cash payment of performance shares, for each tranche the members of

the Management Board are obligated to build up a self-financed investment in METRO ordinary

shares by the end of February in the 3rd year of the performance period. The amount to be

invested per tranche equals 2 thirds of the respective gross annual fixed salary for the Chairman

of the Management Board and 50% for an ordinary member of the Management Board. The plan

aims to ensure that, after no more than 5 years of service, the Chairman of the Management

Board has invested 200% and an ordinary member of the Management Board 150% of his or her

gross fixed salary in METRO ordinary shares, based on the calculated purchase price for the

respective shares. The key factor for calculating the purchase price and thus the number of

ordinary shares to be acquired is the average price of the Xetra closing prices of the METRO

ordinary share over the 40 consecutive stock exchange trading days immediately after the

annual press conference, which takes place before February in the 3rd year of the performance

period. The purchase price corresponds to the quotient of the amount to be invested, which

results from the gross annual fixed salary and the determined average price. If the personal

investment to be made in METRO ordinary shares is not, or not fully, met on the relevant closing

date, the payout amount will initially be paid out in cash, but with the obligation to invest it in

METRO ordinary shares until the share ownership guidelines are met.

Post-employment benefit plans
In addition to the fixed salary, the members of the Management Board receive post-employment

benefits, which can be designed flexibly with regard to the implementation method. For all

implementation methods, it is ensured that the company contribution of 14% of the defined

assessment amount, which is based on the amount of the fixed salary and the target amount of

the short-term incentive, is not exceeded.

Direct commitment to the executive pension plan
The company pension plan is offered in the form of a direct commitment with a defined

contribution component and a defined benefit component. The defined contribution component

is financed jointly by the Management Board and the company. This is based on an

apportionment of ‘7 +14’. When a member of the Management Board makes a contribution of 7%

of the defined assessment amount, the company will contribute twice the amount. The

assessment is based on the amount of the fixed salary and the target amount of the short-term

incentive. When a member of the Management Board leaves the company before benefits

become due, the contributions retain the level they have reached. This component of post-

employment benefit plans is covered on the basis of matching life insurance policies by

Hamburger Pensionsrückdeckungskasse VVaG (HPR). The interest rate for the contributions is

paid in accordance with the Articles of Association of the HPR with regard to profit

participation, with a guarantee applying to the paid-in contribution.

Entitlement to pension plans exists

if the employment ends with or after reaching the statutory retirement age in the German

statutory pension insurance,

as early post-employment benefit if the employment ends after the age of 60 or after the age

of 62 for pension commitments granted after 31 December 2011 and before reaching the

regular retirement age,

in the event of disability or death, provided that the relevant conditions of eligibility are met.

Payment can be made in the form of a one-time capital payment, instalments or a life-long

pension. A minimum benefit is granted in the case of invalidity or death. In such instances, the

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total amount of contributions that would have been credited to the member of the Management

Board for every calendar year up to a contribution period of 10 years, but limited to the point

when the individual turns 60, will be added to the benefits balance. This component of post-

employment benefits plans is not covered by life insurance policies and will be provided directly

by the company when the benefit becomes due.

Alternative implementation
As an alternative to the executive pension plan, members of the Management Board may choose

to build up post-employment benefits by paying a gross amount on a monthly or annual basis. In

this case, the pension can only be financed by the company’s contribution without making a

personal contribution and amounts to a maximum of 14% of the defined assessment amount,

which is based on the amount of the fixed salary and the target amount of the short-term

incentive.

Deferred compensation
Furthermore, members of the Management Board have been offered the option of converting

future remuneration components in the fixed salary as well as in the variable remuneration into

post-employment benefit plans with HPR as part of a tax-privileged remuneration conversion

scheme.

Other non-monetary and supplemental benefits
The supplemental benefits to be granted to the members of the Management Board are

contractually agreed, but vary individually in their amount and scope based on the respective

contractual situation. They may include the following benefits and non-cash benefits, including

any corresponding taxes: provision of a company car with the option of using an internal driving

service; conclusion of an accident insurance policy, inclusion in a Directors and Officers (D&O)

insurance policy subject to the statutory deductible requirement; subsidy for a preventive health

check-up; subsidies for health and long-term care insurance; assumption of costs for security

installations, school fees and relocation costs; as well as extended continued pay in the event of

illness. Furthermore, there is the option to use company car budgets that have not been fully

utilised for post-employment benefits. In exceptional cases, compensation payments may be

made to newly appointed members of the Management Board for remuneration promised by the

previous employer that lapses due to the change.

In the event of the death of a member of the Management Board during active service, his or

her surviving dependants will be paid the fixed salary for the month in which the death occurred

as well as for an additional 6 months.

Supplementary clauses
The employment contracts of the members of the Management Board also contain the following

clauses:

Share ownership guidelines
With the remuneration system in force since 1 October 2020, the share ownership guidelines

have been unlinked from the long-term incentive in order to reduce the complexity of the

remuneration system and in particular the long-term incentive. The members of the Management

Board are obliged to build up a self-financed investment in METRO ordinary shares (personal

investment) over a period of 5 years of service. The amount to be invested for the personal

investment is 100% of the fixed salary for a regular member of the Management Board and 200%

for the Chairman of the Management Board.

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A sale of ordinary shares is only permitted if the personal investment is fulfilled and only for a

number of ordinary shares exceeding the mandated personal investment. The personal

investment must be retained until at least the date of retirement from the Management Board of

the company.

Holdback (malus)/clawback clause
The Supervisory Board reserves the right to take extraordinary developments into account

within reasonable limits. In the event of serious violations by a member of the Management

Board of his or her legal obligations, the Supervisory Board is entitled, at its sole discretion, to

withhold in whole or in part any components of the short-term incentive and the long-term

incentive that have not yet been paid out (holdback/malus) and to reclaim any components of

the long-term incentive that have already been paid out (clawback). The option of withholding

and reclaiming exists even if the appointment as a member of the Management Board or the

employment contract has already ended. However, the clawback option is only available until the
end of the 3rd year after payment of the respective long-term variable remuneration.

In addition, the Supervisory Board has the right not to pay the remuneration of a member of

the Management Board in whole or in part if he or she negligently or intentionally breaches his

or her duties and the company suffers a loss as a result. This is without prejudice to the right to

reduce the remuneration to be paid in the future in the event of a deterioration of the company’s

position according to § 87 Section 2 of the German Stock Corporation Act (AktG).

Post-contractual restraint on competition
In addition, the employment contracts of the members of the Management Board generally

provide for a post-contractual restraint on competition. Accordingly, the members of the

Management Board are prohibited from rendering services to or for a competitor for a period of

12 months after termination of the employment contract. For this purpose, compensation for

non-competition has been agreed which corresponds to the target remuneration consisting of

the fixed salary, short-term incentive and long-term incentive for the duration of the post-

contractual restraint on competition and is paid in monthly instalments. These payments are

offset against remuneration earned through other work. The company has the option to waive

the post-contractual restraint on competition prior to or upon termination of the employment

contract with effect from receipt of the corresponding declaration. If the employment contract

ends at the agreed contract end date, notification is given, no later than 9 months before the

agreed contract end date, as to whether or not the Supervisory Board waives the post-

contractual restraint on competition.

Contractual term and benefits in the event of employment termination
The term of the employment contracts is linked to the duration of the appointment and complies

with the provisions of the German Stock Corporation Act. The initial appointment of members of

the Management Board should not exceed 3 years.

Severance payments in cases of premature terminations of management roles without good

cause are limited to 2 annual remunerations (severance cap) and must not exceed the

remuneration that would be paid for the remaining term of the employment contract.

Change of control clause
In the event of a change of control, Christian Baier and Olaf Koch, with whom this clause was

already agreed in a previously existing employment contract, respectively is or was granted the

right to resign from office for good cause within a period of 6 months after the change of

control with a notice period of 3 months to the end of the month and to terminate the

Management Board contract on this date (extraordinary termination right).

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The contractual provisions assume a change of control if either a single shareholder or a

number of jointly acting shareholders acquire a controlling interest in the meaning of § 29 of the

German Securities Acquisition and Takeover Act (WpÜG) by way of holding at least 30% of the

voting rights and the change of control significantly interferes with the responsibilities of a

member of the Management Board.

If the extraordinary termination right is exercised, or if the employment contract is terminated

on the basis of an amicable agreement within 6 months from the change of control, there is an

entitlement to a one-time remuneration payment for contractual claims during the remaining

term of the employment contract. In this case, the amount of the severance pay is limited to

150% of the severance payment cap. The entitlement to a severance payment lapses if the

employment is terminated by the company for good cause pursuant to § 626 of the German

Civil Code (BGB).

No ‘change of control’ clause is agreed for new employment contracts (initial appointment).

Special remuneration
The Supervisory Board may decide on any – even retrospective – special remuneration for

extraordinary performance at its reasonable discretion.

Sideline activities
The assumption of supervisory board mandates and offices of a comparable nature in companies

outside the group, activities in associations and other committees that are in the interest of the

company, as well as the assumption of tasks in charitable, social and other non-profit

organisations require prior consent by the Presidential Committee.

If the members of the Management Board assume intra-group mandates, the remuneration of

these mandates must be offset against the Management Board remuneration. Generally, this also

applies to non-group mandates; however, the Presidential Committee may decide otherwise.

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Remuneration of the Management Board in financial year 2020/21
The remuneration of members of the Management Board in financial year 2020/21 is as follows:

REMUNERATION OF THE MANAGEMENT BOARD IN FINANCIAL YEAR 2020/211

Financial
year

Fixed
salary

Supplemental
benefits

Short-term
variable
remuneration8

Long-term variable
remuneration

Value of
the
granted
tranche9

(Payout
from
tranches
granted in
the past)

Total10

(Effective
remuneration11)

€1,000

Dr Steffen Greubel2

Christian Baier

Andrea Euenheim3

Rafael Gasset4

Eric Poirier4

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

–

458

700

800

458

656

360

720

360

720

Olaf Koch5

2019/20

1,200

Heiko Hutmacher6

Total7

2020/21

2019/20

2020/21

300

225

–

2019/20

3,303

2020/21

3,654

–

134

110

220

116

278

–

392

549

–

700

950

1,200

822

1,060

950

560

–

881

858

653

589

870

762

870

762

–

1,167

(0)

2,548

(162)

(0)

2,871

1,245

2,089

1,340

2,762

1,346

2,820

1,828

(0)

3,992

–

(335)

(0)

(251)

867

226

–

(1,167)

(1,667)

(2,175)

(592)

(1,500)

(470)

(2,000)

(476)

(2,058)

(2,164)

(1,202)

(226)

(251)

1,900

5,402

5,102

2,971

(0)

10,697

(5,595)

(748)

12,576

(10,353)

1 Disclosures pursuant to § 285 Sentence 1 No. 9a and § 314 Section 1 No. 6a of the German Commercial Code (HGB) (excluding provisions for post-employment benefits

plans).

2 Employment contract with the company since 1 May 2021.
3 Employment contract with the company since 1 November 2019.
4 Employment contract with the company since 1 April 2020. The employer contribution to establish a pension scheme, the use of which can be determined individually, is

reported as a supplemental benefit.

5 Employment contract with the company until 31 December 2020.
6 Employment contract with the company until 31 December 2019.
7 Reported figures for financial year 2019/20 are shown for the members of the Management Board who received remuneration in financial year 2020/21. The remuneration

for the members of the Management Board in financial year 2019/20 totalled €11.510 million (cf. 2019/20 Annual Report).

8 For Olaf Koch and Christian Baier, the short-term variable remuneration includes the special bonuses granted for financial year 2019/20 for the sale of the majority share

in METRO China, amounting to €950 thousand for each. No payments were made from the short-term variable remuneration for financial year 2019/20.

9 The fair value of the long-term variable remuneration is shown.
10 Total of the columns fixed salary, supplemental benefits, short-term variable remuneration and value of the granted tranche of the long-term variable remuneration.
11 Total of the columns fixed salary, supplemental benefits, short-term variable remuneration and payout from tranches granted in the past of the long-term variable

remuneration.

Long-term incentive (performance cash plan) in financial year 2020/21
For the tranche of the performance cash plan granted in financial year 2020/21, the target

amount is €0.9 million for Christian Baier, €0.618 million for Andrea Euenheim and €0.8 million

each for Rafael Gasset and Eric Poirier. Dr Steffen Greubel and Olaf Koch were not granted a

tranche of the performance cash plan in financial year 2020/21.

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PERFORMANCE CASH PLAN

Tranche

End of term

2020/21

30/9/2024

METRO starting share price
for the TSR component

Management Board target
amount as of 30/9/2021

€9.45

€3,118,000

The value of the tranche of the performance cash plan allocated in financial year 2020/21 was

calculated by external experts using recognised financial-mathematical methods.

In addition to the tranche of the performance cash plan issued in the reporting year, the

active members of the Management Board also have access to the following tranches of the

long-term incentive granted during their Management Board activities: Christian Baier to the

2018/19 and 2019/20 tranches of the performance share plan and Andrea Euenheim, Rafael

Gasset and Eric Poirier each to the 2019/20 tranche of the performance share plan.

The target achievement factor for the 2017/18 tranche of the performance share plan, whose

performance period ended in financial year 2020/21, was 0.1994.

PERFORMANCE SHARE PLAN

Tranche

End of performance period

after the 40th stock exchange trading day following the
Annual General Meeting in the 3 years after issuance of
the tranche

2016/17

2017/18

2018/19

2019/20

METRO starting share price
for the TSR component

Management Board target
amount as of 30/9/2021

€17.14

€15.10

expired

paid out

€14.64

€3,750,000

€9.11

€4,690,000

In financial year 2020/21, value adjustments resulted from the current tranches of long-term

variable remuneration. The company’s expenses amounted to €0.719 million for Christian Baier,

€0.761 million for Andrea Euenheim and €0.846 million each for Rafael Gasset and Eric Poirier.

The amount for Olaf Koch was €1.056 million. In financial year 2020/21, provisions of

€0.082 million were released.

As of 30 September 2021, the provisions totalled €6.108 million.

Services after the end of employment in financial year 2020/21 (including provisions for post-
employment benefit plans)
In financial year 2020/21, a total of €0.621 million was used in accordance with the International

Financial Reporting Standards (IFRS) and €0.559 million in accordance with the German

Commercial Code (HGB) for the remuneration of the active members of the Management Board

of METRO AG for benefits to be provided after the end of their employment (2019/20:

€0.68 million determined according to IFRS and HGB). Of this amount, post-employment

benefits for Dr Steffen Greubel were €0.185 million under IFRS and €0.113 million under HGB, for

Andrea Euenheim €0.159 million under IFRS and €0.169 million under HGB, for Christian Baier

€0.196 million under IFRS and under HGB and for Olaf Koch €0.081 million.

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Provisions according to IFRS and the German Commercial Code (HGB) amount to

approximately €0.03 million for Andrea Euenheim. No further provisions are to be formed.

The present value of the commitment volume according to IFRS and the German Commercial

Code (HGB) amounts to approximately €0.2 million for Dr Steffen Greubel, approximately

€1.6 million for Christian Baier, approximately €0.4 million for Andrea Euenheim and

approximately €4.6 million for Olaf Koch. With the exception of the provision listed in the last

paragraph, the cash value of the commitment volume is offset by assets. There is no

commitment volume for Rafael Gasset and Eric Poirier, as they have decided to structure a

pension plan on their own.

Termination benefits in financial year 2020/21
An agreement was reached with Olaf Koch in financial year 2019/20 for early termination of his

employment contract with effect from the end of 31 December 2020. The short-term incentive

until 31 December 2020 will be paid to Olaf Koch in accordance with the agreement. The

tranches of the long-term incentive already granted to Olaf Koch remain in place and will be

settled in accordance with the terms of the plan. No severance payment will be made to Olaf

Koch.

Remuneration of members of the Supervisory Board

The members of the Supervisory Board receive a fixed yearly remuneration amount in

accordance with § 13 of METRO AG’s Articles of Association. In financial year 2020/21, this

amounted to €80,000 per ordinary member. The value added tax payable to the respective

remuneration is reimbursed to the members of the Supervisory Board in accordance with § 13

Section 5 of METRO AG’s Articles of Association.

The individual amount of Supervisory Board remuneration takes into account the duties and

responsibilities of the individual members of the Supervisory Board by considering special

assignments. The remuneration of the Chairman of the Supervisory Board is 3 times higher than

that of an ordinary member of the Supervisory Board; that of the Vice Chairman and the

chairpersons of the committees is twice as high; and that of the other members of the

committees is 1.5 times higher. The remuneration for membership or chairmanship of a

committee will be paid only if at least 2 meetings or other resolutions took place during the

respective financial year. A member of the Supervisory Board who holds several offices at once

receives remuneration for only 1 office; in the case of different levels of remuneration, the

member receives remuneration for the most highly paid office.

Remuneration factors

Chairman of the Supervisory Board

Vice Chairman
Committee chairpersons1
Committee members1

Members of the Supervisory Board

1 With a minimum of 2 meetings/resolutions.

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The relevant individual amounts for financial year 2020/21 are as follows:

REMUNERATION OF MEMBERS OF THE SUPERVISORY BOARD FOR FINANCIAL YEAR 2020/21 PURSUANT TO
§13 OF THE ARTICLES OF ASSOCIATION1

€

Jürgen Steinemann, Chairman

Xaver Schiller (Vice Chairman)

Marco Arcelli

Stefanie Blaser

Herbert Bolliger (until 19 February 2021)

Gwyn Burr

Thomas Dommel

Prof. Dr Edgar Ernst

Michael Heider

Udo Höfer

Peter Küpfer (until 19 February 2021)

Rosalinde Lax

Dr Fredy Raas

Roman Šilha (since 19 February 2021)

Eva-Lotta Sjöstedt

Dr Liliana Solomon

Alexandra Soto

Stefan Tieben (since 19 February 2021)

Manuela Wetzko

Angelika Will

Manfred Wirsch

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Financial year

Multiplier

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

Fixed
remuneration

240,000

130,000

160,000

70,000

120,000

90,000

120,000

90,000

50,000

120,000

160,000

90,000

120,000

20,000

80,000

33,333

20,000

80,000

120,000

80,000

113,333

80,000

120,000

53,333

20,000

106,666

80,000

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Silke Zimmer

Total2

2019/20

2020/21

2019/20

2020/21

80,000

1,883,333

2,283,332

1 Plus applicable value added tax in accordance with § 13 Section 5 of the Articles of Association.

2 Reported figures for financial year 2019/20 relate to active members of the Supervisory Board in financial year 2020/21.

In financial year 2020/21, individual members of the Supervisory Board of METRO AG also

received remuneration from the group companies for Supervisory Board mandates at group

companies.

INTRA-GROUP COMPENSATION OF THE MEMBERS OF THE SUPERVISORY BOARD
FOR FINANCIAL YEAR 2020/211

€

Xaver Schiller

Thomas Dommel

Michael Heider

Rosalinde Lax

Manuela Wetzko

Manfred Wirsch

Total

Financial year

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

9,000

4,500

6,000

37,500

1 Plus potentially applicable value added tax.

2 Reported figures for financial year 2019/20 relate to active members of the Supervisory Board in financial year 2020/21.

Outside their committee activities , the members of the Supervisory Board were not granted any

remuneration or benefits for work performed, in particular not for consulting and brokerage

services, on behalf of companies of METRO.

Outlook
On 19 February 2021, the Annual General Meeting passed a resolution on the remuneration of the

members of the Supervisory Board and the associated amendment to § 13 of the Articles of

Association with a majority of 99.72%, in accordance with § 113 Section 3 of the German Stock

Corporation Act. According to this resolution, the fixed remuneration of the ordinary members of the

Supervisory Board remains unchanged. However, from financial year 2021/22 onwards, it will be

further differentiated with regard to the time spent and the intensity of work associated with various

functions on the Supervisory Board. The regulations of the revised version of § 13 of the Articles of

Association will be applicable as of 1 October 2021 and will then replace the previous regulation of the

Articles of Association regarding the remuneration of the Supervisory Board.

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7 TAKEOVER-RELATED DISCLOSURES

The takeover-related disclosures as of 30 September 2021 required under §§ 289a Section 1 and

315a Section 1 of the German Commercial Code (HGB) are shown below:

Composition of the subscribed capital

As of 30 September 2021, the share capital of METRO AG amounted to €363,097,253. It is

divided into a total of 360,121,736 ordinary no-par-value bearer shares (pro rata value of the

share capital: €360,121,736, approximately 99.18%), as well as 2,975,517 preference no-par-value

bearer shares (pro rata value of the share capital: €2,975,517, approximately 0.82%). Each share

in the company has a notional interest of €1.00 in the share capital.

Each ordinary share grants a single vote in the company’s Annual General Meeting. The

ordinary shares carry full dividend rights. In contrast to ordinary shares, preference shares do

not carry voting rights but confer a preferential entitlement to profits as prescribed in § 21 of the

Articles of Association of METRO AG, which state:

‘(1) Holders of non-voting preference shares will receive a preliminary dividend from the

annual balance sheet profit in the amount of €0.17 for each preference share.

(2) Should the balance sheet profit available for distribution not suffice in any one financial

year to pay the preliminary dividend, the arrears (excluding any interest) shall be paid from the

balance sheet profit of subsequent financial years in such manner that any older arrears are paid

off prior to any more recent ones and that the preference dividends payable from the profit of a

financial year are not distributed until all accrued arrears have been paid.

(3) Following distribution of the preliminary dividends, the holders of ordinary shares will be

paid a dividend of €0.17 for each ordinary share. Subsequently, a non-cumulative extra dividend

per share will be paid to the holders of non-voting preference shares. The extra dividend shall

amount to 10% of the dividend paid to the holders of ordinary shares under observation of

Section 4, provided such dividend equals or exceeds €1.02 per ordinary share.

(4) The holders of non-voting preference shares and of ordinary shares will equally share in

any additional profit distribution in the proportion of their shares in the share capital.’

Other rights associated with ordinary and preference shares include in particular the right to

attend the Annual General Meeting (§ 118 Section 1 of the German Stock Corporation Act

[AktG]), the right to information (§ 131 of the German Stock Corporation Act) and the right to

file a legal challenge or a complaint for nullity (§§ 245 Nos. 1–3, 246, 249 of the German Stock

Corporation Act). In addition to the previously mentioned right to receive dividends,

shareholders principally have a subscription right when the share capital is increased (§ 186

Section 1 of the German Stock Corporation Act). They are also entitled to liquidation proceeds

after the closure of the company (§ 271 of the German Stock Corporation Act) and to severance

payment and settlements as a result of certain structural measures, particularly pursuant to

§§ 304 et seqq., 320b and 327b of the German Stock Corporation Act.

Voting rights and transfer-related restrictions

To the best knowledge of the Management Board, the following agreements exist or existed

during financial year 2020/21, which may be construed as restrictions in the sense of § 315a

Section 1 No. 2 and § 289a Section 1 No. 2 of the German Commercial Code.

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Beisheim Capital GmbH, Düsseldorf (Germany), Beisheim Holding GmbH, Baar (Switzerland), and

Palatin Verwaltungsgesellschaft mbH, Essen (Germany), a subsidiary of Meridian Stiftung, Essen

(Germany), have been part of a pool of voting rights since 29 July 2019. Based on Beisheim Group’s

voting rights notification dated 5 October 2021, the partners in the voting pool hold 23.94% of the

ordinary shares. The declared objective of Meridian Stiftung and the Beisheim Group is to exercise the

voting rights from the METRO shares held by them jointly. In the future they plan to act uniformly vis-

à-vis METRO and its shareholders in all material matters. The existing pooling agreement between

Beisheim Capital GmbH, Düsseldorf (Germany), and Beisheim Holding GmbH, Baar (Switzerland), is

suspended for the duration of the new voting rights pool with Meridian Stiftung, Essen (Germany). In

connection with the demerger of the former METRO AG, CECONOMY AG (formerly operating as

METRO AG) has assumed a lock-up agreement with respect to the shares held by it in accordance

with the Group Separation Agreement dated 13 December 2016. According to this agreement,

CECONOMY AG is obligated not to sell its approximately 1% of the shares in METRO AG, which were

granted as part of the demerger within the spin-off from the group, until 1 October 2023.

In addition, legal restrictions on voting rights may apply, for example pursuant to § 136 of the

German Stock Corporation Act or, if the company holds own shares, pursuant to § 71 of the German

Stock Corporation Act.

Shares held in capital

As of 30 September 2021, the following direct and indirect capital interests existed and entitled their

respective holders to more than 10% of the voting rights:

Name/company

Beisheim Capital GmbH, Düsseldorf, Germany1

Beisheim Holding GmbH, Baar, Switzerland1

Beisheim Group GmbH & Co. KG, Düsseldorf, Germany2

Beisheim Verwaltungs GmbH, Düsseldorf, Germany2

Prof. Otto Beisheim Stiftung, Munich, Germany

Prof. Otto Beisheim Stiftung, Baar, Switzerland

Palatin Verwaltungsgesellschaft mbH, Essen, Germany1

BVG Beteiligungs- und Vermögensverwaltungs-GmbH, Essen, Germany

Gebr. Schmidt GmbH & Co. KG, Essen, Germany

Gebr. Schmidt Verwaltungsgesellschaft mbH, Essen, Germany

Meridian Stiftung, Essen, Germany

EP Global Commerce GmbH, Grünwald, Germany

EP Global Commerce VII GmbH, Grünwald, Germany

EP Global Commerce IV GmbH, Grünwald, Germany

EP Global Commerce III GmbH, Grünwald, Germany

EP Global Commerce a.s., Prague, Czech Republic

Daniel Křetínský

Patrik Tkáč3

Direct/indirect capital interest entitling
to more than 10% of voting rights

Direct

Indirect

Direct

Indirect

Direct

Indirect

1 Coordination of exercising voting rights based on a pool of voting rights between Beisheim Capital GmbH, Beisheim Holding GmbH and Palatin Verwaltungsgesellschaft

mbH.

2 On 5 October 2021, the Beisheim Group announced through a voting rights notification that an intra-group restructuring had taken place; as a result, Beisheim Group

GmbH & Co. KG, Düsseldorf, and Beisheim Verwaltungs GmbH, Düsseldorf, have left the shareholding chain.

3 Attribution of voting rights due to concerted behaviour within the meaning of § 34 Section 2 of the German Securities Trading Act.

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The information above is in particular based on notifications issued under § 33 et seqq. of the

German Securities Trading Act that were received and published by METRO AG.

Voting rights notifications published by METRO AG can be found on the website

www.metroag.de/en in the section Newsroom – Legal Announcements.

Holders of shares with special rights as well as type of voting right control of
employee shares

The company has not issued any shares with special rights pursuant to § 315a Section 1 No. 4

and § 289a Section 1 No. 4 of the German Commercial Code. No capital interests are held by

employees pursuant to § 315a Section 1 No. 5 and § 289a Section 1 No. 5 of the German

Commercial Code.

Provisions governing the appointment and dismissal of members of the
Management Board and changes to the Articles of Association

The appointment and dismissal of members of the Management Board of METRO AG are

governed in §§ 84, 85 of the German Stock Corporation Act and §§ 30, 31, 33 of the German Co-

determination Act. § 5 of the Articles of Association of METRO AG stipulates that the

Management Board shall comprise at least 2 members and that the actual number of members

of the Management Board is determined by the Supervisory Board.

Changes to the Articles of Association of METRO AG are determined principally in

accordance with §§ 179, 181, 133, 119 Section 1 No. 5 of the German Stock Corporation Act. There

are numerous other sections of the German Stock Corporation Act that could possibly govern a

change to the Articles of Association and that may amend or supersede the previously

mentioned regulations, for example §§ 182 et seqq. of the German Stock Corporation Act in the

case of capital increases, §§ 222 et seqq. of the German Stock Corporation Act in the case of

capital reductions or § 262 of the German Stock Corporation Act in the case of the public

limited company (‘AG’) being dissolved. Pursuant to § 14 Section 1 of the Articles of Association

of METRO AG, the Supervisory Board may resolve to change the wording of the Articles of

Association without a resolution passed by the Annual General Meeting.

Authorities of the Management Board to issue or buy back shares

Authorities to issue new shares
On 16 February 2018, the Annual General Meeting authorised the Management Board by

resolution to increase the share capital, subject to the consent of the Supervisory Board, by

issuing new ordinary shares against cash or non-cash contributions in one or several tranches for

a total maximum of €181,000,000 by 28 February 2022 (authorised capital). Existing

shareholders may exercise their subscription rights. The newly issued shares may also be

acquired by banks or similarly situated companies selected by the Management Board pursuant

to § 186 Section 5 Sentence 1 of the German Stock Corporation Act, given these institutions

agree to tender such shares to the shareholders.

Subject to the consent of the Supervisory Board, the Management Board is authorised to

exclude shareholder subscription rights in certain exceptional cases specified in § 4 Section 7 of

the METRO AG Articles of Association. In simple terms, this is particularly the case in the

following configurations:

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The shares are issued in exchange for non-cash contributions for the purpose of business

combinations or the acquisition of companies;

to grant a so-called scrip dividend;

in the event of a capital increase in exchange for cash capital contributions to the extent

necessary to grant subscription rights to new ordinary shares to the holders of warrant or

convertible bearer bonds issued by METRO;

in the event of capital increases in exchange for cash capital contributions if the aggregate

par value of such capital increases does not exceed 10% of the company’s share capital and

the issue price of the new ordinary shares is not substantially lower than the listed stock

exchange price of existing ordinary shares of the same class.

The proportional share capital attributable to shares issued under this authority and under

exclusion of the shareholders’ subscription rights in exchange for cash or non-cash capital

contributions must not exceed 20% of the company’s share capital.

The Management Board is authorised to define further details of the capital increases, subject

to the consent of the Supervisory Board. To date, the authorised capital has not been fully

utilised.

Authorities to issue warrant bonds and/or convertible bearer bonds
With a resolution passed on 16 February 2018, the Annual General Meeting authorised the

Management Board to issue, in each case with the consent of the Supervisory Board, warrant or

convertible bearer bonds (in aggregate, ‘bonds’) with an aggregate par value of €1,500,000,000

prior to 15 February 2023, on one or several occasions, and to grant the holders of warrant or

convertible bearer bonds warrant or conversion rights or impose warrant or conversion

obligations upon them for ordinary bearer shares in METRO AG representing up to €50,000,000

of the share capital in accordance with the terms of the warrant or convertible bearer bonds.

This authority results in contingent capital of up to €50,000,000 pursuant to § 4 Section 8 of

the METRO AG Articles of Association.

The bonds may also be issued by a METRO AG subsidiary in the meaning of § 18 of the

German Stock Corporation Act in which METRO AG holds a direct or indirect interest of at least

90%. In that case, the Management Board is authorised to assume, in each case with the consent

of the Supervisory Board, a guarantee for those bonds on behalf of METRO AG and grant their

holders warrant or conversion rights to ordinary bearer shares in METRO AG or impose warrant

or conversion obligations upon them.

Shareholders will be granted their statutory subscription rights by way of the bonds being

acquired by a bank or syndicate of banks with an undertaking to offer such bonds to the

shareholders. If bonds are issued by a METRO AG subsidiary in accordance with § 18 of the

German Stock Corporation Act in which METRO AG holds a direct or indirect interest of at least

90%, METRO AG must ensure that statutory subscription rights are granted to the shareholders

of METRO AG in accordance with the preceding sentence.

Subject to the consent of the Supervisory Board, the Management Board is however

authorised to exclude shareholder subscription rights for fractional amounts arising from

proportional subscriptions to the extent necessary to grant or impose warrant or conversion

rights or obligations with respect to the holders of existing warrant or conversion rights or

obligations in the amount to which they would be entitled to as shareholders after exercising the

warrant or conversion right or performance of the warrant or conversion obligation.

Subject to the consent of the Supervisory Board, the Management Board is also authorised to

entirely exclude shareholder subscription rights to bonds issued in exchange for cash payment

carrying warrant or conversion rights or warrant or conversion obligations, insofar as the

Management Board concludes, after careful review, that the issue price of the bonds is not

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substantially lower than the hypothetical market value ascertained using recognised financial

mathematical methods. This authorisation to exclude subscription rights applies to bonds issued

with warrant or conversion rights or warrant or conversion obligations to pro rata ordinary

shares comprising no more than 10% of the share capital at the time the authority takes effect

or, if this figure is lower, at the time the authorisation is exercised. The limit of 10% of the share

capital is reduced by the pro rata amount of share capital represented by any shares issued (i)

during the effective period of this authority under exclusion of subscription rights according to

§ 186 Section 3 Sentence 4 of the German Stock Corporation Act, or (ii) to service warrant or

convertible bearer bonds providing for warrant or conversion rights or obligations, insofar as

such bonds were issued during the effective period of this authorisation under exclusion of

subscription rights by application of § 186 Section 3 Sentence 4 of the German Stock

Corporation Act mutatis mutandis.

If bonds carrying warrant or conversion rights or warrant or conversion obligations are issued,

the warrant or conversion price is determined pursuant to the rules in § 4 Section 8 of the

Articles of Association of METRO AG.

The warrant or conversion price may be adjusted in the event their economic value is diluted

or in case of a capital reduction or other extraordinary measures or events (for example

unusually high dividends, third parties gaining a controlling interest) to the extent that such an

adjustment is not already provided for by law. Furthermore, the terms of the bonds may provide

for a variable conversion ratio and/or variable warrant and conversion price, where the warrant

or conversion price is determined within a range to be determined on the basis of the share

price development during the term. The bonds’ terms may

provide for the right of METRO AG to pay a cash amount instead of granting shares;

at METRO AG’s discretion, also provide for the warrant or convertible bearer bonds to be

converted into existing ordinary shares in METRO AG or shares in another listed company in

lieu of converting them into new ordinary shares from contingent capital and that warrant

rights or obligations can be performed by the delivery of such shares;

provide for a warrant or conversion obligation or authorise METRO AG to grant bondholders

ordinary shares in METRO AG or shares in another listed company upon maturity in lieu of a

maturity payment in cash.

The Management Board is authorised to determine, in each case with the consent of the

Supervisory Board, the further details pertaining to the issuance and terms of the bonds,

particularly the coupon, issue price, term, division into shares, rules for the protection against

dilution and the warrant or conversion period, or to define such details in consultation with the

corporate bodies of the affiliate of METRO AG which issues the warrant or convertible bonds in

accordance with § 18 of the German Stock Corporation Act.

To date, the authority to issue warrant and/or convertible bearer bonds has not been

exercised.

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Authorities to repurchase own shares
Pursuant to § 71 Section 1 No. 8 of the German Stock Corporation Act, the Annual General

Meeting authorised the company by resolution on 11 April 2017 to acquire its own shares of any

class until 28 February 2022. The authority is limited to the repurchase of shares collectively

representing a maximum of 10% of the share capital issued as of the date the Annual General

Meeting resolution is passed or – if this figure is lower – at the time the authority is exercised.

The shares transferred under this authority, together with any own shares acquired for other

reasons and held by the company or attributable to it pursuant to §§ 71a et seqq. of the German

Stock Corporation Act, shall collectively not exceed a pro rata proportion of 10% in the share

capital at any time.

Shares may be acquired on the stock exchange or by way of a tender offer aimed at all

shareholders. In the process, the authorisation includes specifications regarding the purchase

price and procedures to be followed in case a public offering is oversubscribed.

The Management Board is authorised to use the shares in the company acquired based on the

above authorisation, in particular:

for disposal of shares in the company on the stock exchange or by means of a purchase offer

expressed to all shareholders;

for listing of shares in the company on foreign stock exchanges where they were not hitherto

admitted for trading, where the authorisation includes stipulations regarding the initial listing

price;

for transfer of shares in the company to third parties for non-cash consideration in

connection with business combinations or the acquisition of other companies;

for disposal of shares in the company outside of the stock exchange or via a purchase offer

expressed to all shareholders, provided that the disposal is for cash payment and at a price

not substantially lower than the stock exchange price in effect for listed shares of the

company with the same terms on the date of the disposal. This authority is limited to the

disposal of shares collectively representing a maximum of 10% of the share capital at the time

the authority takes effect or – if this figure is lower – at the time the authority is exercised;

for delivery of shares to holders of warrant or convertible bearer bonds of the company or its

affiliates. The shares transferred under this authority shall collectively not exceed a pro rata

proportion of 10% of the share capital at the time the authority takes effect or – if this figure

is lower – at the time the authorisation is exercised, insofar as such shares were issued to

service warrant or conversion rights or warrant or conversion obligations granted or imposed

in application of § 186 Section 3 Sentence 4 of the German Stock Corporation Act mutatis

mutandis.

for distribution of a stock dividend (scrip dividend), where company shares are used (also

partially and selectively) to service dividend rights of shareholders;

for redemption of shares in the company, without the need for any further resolution by the

Annual General Meeting. Such redemption may also be accomplished without a capital

reduction by increasing the proportional value of the remaining no-par-value shares in the

share capital of the company. In this case, the Management Board is authorised to adjust the

number of no-par-value shares stipulated in the Articles of Association.

All of the authorisations above may be exercised in whole or in part, once or several times,

individually or jointly by the company or its group companies as defined in § 18 of the German

Stock Corporation Act, or by third parties for its or their account. The authorisations can be

applied to both ordinary shares and preference shares.

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Using own shares in accordance with the above authorisations other than selling acquired

company shares on the stock exchange or by offer to all shareholders requires the consent of

the Supervisory Board.

The subscription rights of shareholders are excluded if own shares are used for any of the

purposes authorised above, with the exception of the authority to sell the company’s shares by

making a purchase offer to all shareholders, the authority to distribute dividends in the form of a

scrip dividend and the authority to redeem shares without the need for any further resolution by

the Annual General Meeting.

The Management Board is authorised to exclude shareholder subscription rights for residual

amounts if own shares are used in accordance with the authority to sell the company’s shares by

making a purchase offer to all shareholders in compliance with the principle of equal treatment

stipulated in § 53a of the German Stock Corporation Act. The Management Board is further

authorised to exclude shareholder subscription rights if own shares are used to distribute

dividends in the form of a scrip dividend. To date, the authorisation to repurchase the company’s

own shares has not been exercised.

Fundamental agreements related to the conditions of a change of control

METRO AG is currently a borrower in credit agreements with a total credit limit of €1.3 billion,

which the lender may cancel in the case of a change of control, provided that, additionally and

as a result of the change of control, the credit rating of METRO AG deteriorates to a certain

degree as defined in respective agreements. The lending banks may only cancel the contract

and demand the return of the loans if the change of control and a resulting drop in the credit

rating occur cumulatively. During financial year 2020/21, these credit facilities were not utilised.

Compensation agreements in the event of a takeover bid

The Management Board Employment Contract of Mr Christian Baier, Chief Financial Officer of

METRO AG, provides for a ‘Change of Control’ clause. In the event of a change of control,

Mr Baier has the right to resign from office for good cause and to terminate his Management

Board Employment Contract with a notice period of 3 months, provided that a significant

impairment of his position as a member of the Management Board has occurred within a period

of 6 months after the change of control. If the extraordinary termination right is exercised, or if

the service contract is terminated by mutual agreement, Mr Baier shall be entitled to a lump sum

compensation for his contractual entitlements during the remaining term of the employment

contract, but not more than the amount of 3 years’ remuneration.

However, no compensation agreements with employees have been concluded in the event of

a takeover bid.

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8 SUPPLEMENTARY NOTES FOR METRO AG (PURSUANT TO THE
GERMAN COMMERCIAL CODE)

Overview of financial year 2020/21 and outlook by METRO AG

METRO AG, in its function as the management holding company of the METRO group, is highly

dependent on the development of METRO in terms of its own business development, position

and potential development with its key opportunities and risks.

On account of the holding structure, in deviation from the group-wide view, the annual

surplus under commercial law is the most important key performance indicator of METRO AG as

outlined in German Accounting Standard No. 20 (GAS 20).

Business development of METRO AG

The business development of METRO AG is significantly characterised by the development of its

subsidiaries and the intra-group dividend distribution policy. Financial year 2020/21 continued to

be dominated by the Covid-19 pandemic and the associated government measures. They had a

negative impact on the business development of the group companies, especially in the first half

of the year. In the course of the second half of the year, government measures were eased,

resulting in a trend reversal and a significantly improved business performance. The licensing

fees that METRO AG receives from its subsidiaries also developed accordingly. Correspondingly,

sales revenues and other operating income are slightly below previous year’s level, while cost

savings were realised as planned in the personnel area and in the area of other expenses. After

the negative impact of the disposal of the hypermarket business in the previous year, the net

investment income was again positive, but due to the pandemic-related cautious dividend policy,

the projected net income for the year was not quite achieved.

While the dividend proposal is generally based on the earnings per share reported in the

consolidated financial statements, the income statement and balance sheet from the annual

financial statements of METRO AG are presented below in accordance with the provisions of the

German Commercial Code (HGB).

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Earnings position of METRO AG and profit appropriation

INCOME STATEMENT
FOR THE FINANCIAL YEAR FROM 1 OCTOBER 2020 TO 30 SEPTEMBER 2021 IN ACCORDANCE TO HGB

€ million

Sales revenues

Other operating income

Cost of services purchased

Personnel expenses

Depreciation/amortisation/impairment losses on intangible and tangible assets

Other operating expenses

Investment result

Net financial result

Income taxes

Earnings after taxes

Other taxes

Net profit or loss (+)/net loss for the year (−)

Retained earnings from the previous year

Withdrawal from the capital reserve

Adjustments of the reserves retained from earnings

Balance sheet profit

2019/20

2020/21

358

443

−40

−167

−65

−736

−527

−34

−43

−811

−4

−815

1,070

267

334

426

−37

−130

−64

−490

−42

−15

−3

−1

−4

−8

METRO AG essentially acts as a licensor and as a service provider for the operating METRO

national subsidiaries and invoices them within the framework of the transfer pricing system.

The key services provided in this context include various operational services (consulting

services), holding company services as well as services related to the development and

operation of various in-house IT solutions. In order to be able to provide these services, IT

services in particular are purchased from intra-group subcontractors and external parties, which

are reflected in the cost of purchased services, other operating expenses and depreciation. With

regard to the METRO and MAKRO brands as well as own brand products, METRO AG acts as a

central licensor for its current and temporarily also for former subsidiaries.

In the reporting year, METRO AG settlement amounts of €334 million are reported as sales

revenues. They are broken down into €177 million for settlement amounts received in the form of

licensing fees for the METRO and MAKRO brands as well as €157 million relating to IT and

business services.

The item other operating income consists mainly of settlement amounts for services sold to

current and temporarily also former subsidiaries that are not classified as sales revenues.

To perform its function as a central management holding company, METRO AG has

subcontracted service performances which predominantly relate to costs of marketing and IT

services to group companies as well as third-party companies. To the extent such expenses are

related to settlement payments recognised in the item sales revenues, the corresponding

amounts have been recognised in the item cost of services purchased.

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On average, METRO AG employed 741 people in the 4 quarters of financial year 2020/21. Part-

time employees and temporary workers were converted into full-time equivalents. Personnel

expenses are €37 million below previous year’s level. The decrease in personnel expenses

compared to the previous year results basically from the fact that restructuring expenses were

included in the previous year.

Depreciation and amortisation in the amount of €40 million are attributable to scheduled

depreciation on the rights of use for the METRO and MAKRO brands and otherwise relate to

scheduled depreciation of other fixed assets.

Other operating expenses are characterised by expenses incurred by METRO AG as part of

exercising its function as a management holding company through commissioning of services

from group companies as well as third-party companies. While these costs increased, currency

losses and expenses for risk provisions related to the settlement of licensing fees in various

countries were reduced. In the previous year, higher dividends from real estate companies and

higher impairment losses on financial assets were incurred in connection with the disposal of the

hypermarket business.

METRO AG reported income from investments in the amount of €15 million in financial year

2020/21. Income from profit and loss transfer agreements in the amount of €203 million mainly

related to intra-group service providers. Losses of €225 million were absorbed, mainly from the

METRO Cash & Carry International and Hospitality Digital divisions.In the reporting period,

impairment losses and reversals of impairment losses in the amount of €46 million were made

on investments in affiliated companies. In addition to real estate companies, they also concerned

an international wholesale company whose corporate planning is more positive again after the

pandemic-related restrictions have eased. The expenses from the disposal of financial assets

relate to the intra-group disposal of a purchasing company.

The financial result amounted to €−42 million, mainly due to a reduced interest result.

The decrease in income taxes is mainly due to the fact that previous year’s figure included an

increased tax expense from the disposal of the hypermarket business.

The net loss for the year was €−4 million. Including retained earnings from the previous year

in the amount of €12 million and a transfer to reserves retained from earnings in the amount of

€−8 million, the company shows a balance sheet profit of €0 million.

Since the annual financial statements do not show any distributable balance sheet profit

earnings, there are no planned dividend distributions in financial year 2020/21 for ordinary

shares or preference shares.

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Financial position of METRO AG

Cash flows
The cash in hand on the closing date amounts to €1,055 million and consists primarily of bank

deposits due to cash pool income from the subsidiaries.

Capital structure

EQUITY AND LIABILITIES

€ million

Equity

Share capital

Capital reserve

Reserves retained from earnings

Balance sheet profit

Provisions

Liabilities

Bonds

Liabilities to banks

Liabilities to affiliated companies

Miscellaneous liabilities

Prepaid expenses and deferred charges

30/9/2020

30/9/2021

363

5,048

267

5,678

702

2,071

2,663

4,841

159

11,380

363

5,048

5,419

561

1,802

2,597

4,490

102

10,572

The liabilities side of the balance sheet consists of €5,419 million in equity and €5,153 million in

provisions, liabilities and deferred income. The equity ratio as of the closing date is 51%. The

provisions amounted to €561 million on the closing date. Liabilities include €1,802 million in

bonds and €54 million in liabilities to banks. The reduction compared to the previous year

results from scheduled repayments of financial transactions. On the other hand, there are

liabilities to affiliated companies in the amount of €2,597 million. They mainly relate to short-

term financial investments of subsidiaries.

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Asset position of METRO AG

ASSETS

€ million

Non-current assets

Intangible assets

Property, plant and equipment

Financial assets

Current assets

Receivables and other assets

Cash on hand, bank deposits and cheques

Prepaid expenses and deferred charges

30/9/2020

30/9/2021

875

8,147

9,024

1,263

1,083

2,346

11,380

812

8,143

8,957

554

1,055

1,609

10,572

The assets amount to a total of €10,572 million as of the closing date and are mainly

characterised by financial assets of €8,143 million, receivables from affiliated companies

amounting to €525 million and the right to use the METRO and MAKRO brands (€800 million),

which is recognised under intangible assets. €8,138 million in financial assets consist mainly of

shares in affiliated companies and essentially include the shares in the holding company for

wholesale companies (€6,967 million), in real estate companies (€700 million) and in service

providers (€470 million). The decline in receivables and other assets was due to lower

receivables from the profit and loss transfer as well as payments received from trade receivables.

Financial assets represent 77% of the balance sheet total.

Risk situation of METRO AG

Since METRO AG is largely linked to the companies of the METRO Group, among other things

through financing and guarantee commitments as well as through direct and indirect

investments in the associate companies, the risk situation of METRO AG is significantly

dependent on the risk situation of the METRO Group. Therefore, the statements regarding the

overall assessment of the risk situation by management also apply as a summary of the risk

situation of METRO AG.

Outlook of METRO AG

In its function as the management holding company, METRO AG is highly dependent on the

development and dividend distribution policies of its shareholdings. We assume that the

development of licence income from subsidiaries in conjunction with continued strict cost

management as well as a positive investment result will lead to a positive net profit being

reported again in the coming financial year 2021/22.

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Planned investments of METRO AG

Within the setting of the implementation of investments by the METRO Group, METRO AG will

support the group companies through increases in shareholdings or loans, if necessary. In

addition, investments in shareholdings in affiliated companies may result from intra-group share

transfers.

Declaration on corporate management

The declaration on corporate management pursuant to § 289f HGB and § 315d HGB, which has

been combined with the corporate governance report, is permanently available to the public on

the company’s website (www.metroag.de) under the heading ‘Company – Corporate

Governance’.

Declaration pursuant to § 312 of the German Stock Corporation Act (AktG)

The Management Board of METRO AG has prepared a report on relationships with affiliated

companies for financial year 2020/21 pursuant to § 312 of the German Stock Corporation Act

(AktG) and has issued the following statement at the end of the report:

“The Management Board of METRO AG declares that during the reporting period the

company and the companies controlled by it – according to the circumstances known to it at the

time when the legal transactions were carried out or the measures were taken – received

appropriate consideration satisfying an arm’s length comparison for each of the reported legal

transactions. There were no other reportable legal transactions in the reporting period from

29 December 2020 to 30 September 2021. No measures were initiated or forborne during the

reporting period.’

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INCOME STATEMENT

139

RECONCILIATION FROM
PROFIT OR LOSS FOR THE
PERIOD TO TOTAL
COMPREHENSIVE INCOME

140

BALANCE SHEET

142

STATEMENT OF CHANGES IN
EQUITY

144

CASH FLOW STATEMENT

146

NOTES

147

148

171

172

175

186

233

Segment reporting

Notes to the group accounting principles and
methods

Capital management

Notes to the Business Combinations

Notes to the income statement

Notes to the balance sheet

Other notes

278

RESPONSIBILITY STATEMENT
OF THE LEGAL
REPRESENTATIVES

279

INDEPENDENT AUDITOR’S
REPORT

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F I N A N C I A L
S T A T E M E N T S

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CONSOLIDATED FINANCIAL
STATEMENTS

INCOME STATEMENT
for the financial year from 1 October 2020 to 30 September 2021

€ million

Sales revenues

Cost of sales

Gross profit on sales

Other operating income

Selling expenses

General administrative expenses

Other operating expenses

Earnings from impairment of financial assets

Earnings share of operating companies recognised at equity

Earnings before interest and taxes EBIT

Earnings share of non-operating companies recognised at equity

Other investment result

Interest income

Interest expenses

Other financial result

Net financial result

Earnings before taxes EBT

Income taxes

Profit or loss for the period from continuing operations

Profit or loss for the period from discontinued operations after taxes

Profit or loss for the period

Profit or loss for the period attributable to non-controlling interests

from continuing operations

from discontinued operations

Profit or loss for the period attributable to the shareholders of
METRO AG

from continuing operations

from discontinued operations

Earnings per share in € (basic = diluted)

from continuing operations

from discontinued operations

Note no.

2019/20

2020/21

25,632

−21,271

4,361

948

−3,849

−831

−321

−64

257

−252

−72

−289

−32

−108

−140

612

471

(5)

(6)

460

(−146)

(606)

(1.27)

(−0.40)

(1.67)

24,765

−20,539

4,226

1,107

−3,814

−875

−440

−26

197

−224

−157

−85

−45

(11)

(0)

−56

(−56)

(0)

(−0.15)

(0.00)

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

C O N S O L I D A T E D
F I N A N C I A L
S T A T E M E N T S

R E C O N C I L I A T I O N F R O M P R O F I T O R L O S S F O R T H E
P E R I O D T O T O T A L C O M P R E H E N S I V E I N C O M E

139

RECONCILIATION FROM PROFIT OR LOSS FOR THE PERIOD TO
TOTAL COMPREHENSIVE INCOME
for the financial year from 1 October 2020 to 30 September 2021

€ million

Profit or loss for the period

Other comprehensive income

Items of other comprehensive income that will not be reclassified
subsequently to profit or loss

Remeasurement of defined benefit pension plans

Effects from the fair value measurements of equity instruments

Income tax attributable to items of other comprehensive income that
will not be reclassified subsequently to profit or loss

Items of other comprehensive income that may be reclassified
subsequently to profit or loss

Currency translation differences from translating the financial
statements of foreign operations

Effective portion of gains/losses from cash flow hedges

Effects from the fair value measurements of debt instruments

Share of other comprehensive income of associates/joint ventures
accounted for using the equity method

Income tax attributable to items of other comprehensive income that
may be reclassified subsequently to profit or loss

Other comprehensive income

Total comprehensive income

Total comprehensive income attributable to non-controlling interests

Total comprehensive income attributable to the shareholders of
METRO AG

Note no.

2019/20

2020/21

471

−45

−2

−470

−468

−2

−466

−5

−2

105

111

−9

107

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

C O N S O L I D A T E D
F I N A N C I A L
S T A T E M E N T S

B A L A N C E S H E E T

140

BALANCE SHEET
as of 30 September 2021

ASSETS

€ million

Non-current assets

Goodwill

Other intangible assets

Property, plant and equipment

Investment properties

Financial assets

Investments accounted for using the equity method

Other financial assets

Other non-financial assets

Deferred tax assets

Current assets

Inventories

Trade receivables

Financial assets

Other financial assets

Other non-financial assets

Entitlements to income tax refunds

Cash and cash equivalents

Assets held for sale

Note no.

1/10/20191

30/9/20201

30/9/2021

8,845

785

562

6,635

127

179

150

291

8,963

1,917

482

622

279

190

500

4,970

17,808

8,284

731

576

5,811

188

421

185

258

4,886

1,860

429

525

377

145

1,525

13,170

8,004

644

568

5,663

170

361

142

345

4,815

1,964

496

505

281

1,474

12,819

1 Previous year’s comparative values were adjusted due to a change in the accounting method (inventories); see the notes section ‘Change in accounting method

(inventories)’.

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

C O N S O L I D A T E D
F I N A N C I A L
S T A T E M E N T S

B A L A N C E S H E E T

141

EQUITY AND LIABILITIES

€ million

Equity

Share capital

Capital reserve

Reserves retained from earnings

Equity before non-controlling interests

Non-controlling interests

Non-current liabilities

Provisions for post-employment benefits plans and
similar obligations

Other provisions

Financial liabilities

Other financial liabilities

Other non-financial liabilities

Deferred tax liabilities

Current liabilities

Trade liabilities

Provisions

Financial liabilities

Other financial liabilities

Other non-financial liabilities

Income tax liabilities

Liabilities related to assets held for sale

Note no.

1/10/20191

30/9/20201

30/9/2021

33, 35

33, 36

33, 34

33, 35

33, 36

2,323

363

6,118

−4,189

2,292

5,652

543

108

4,766

155

9,832

3,572

158

1,164

728

228

169

3,813

17,808

2,039

363

5,048

1,847

363

5,048

−3,380

−3,585

2,031

5,506

550

139

4,541

193

5,625

3,199

287

773

724

451

184

1,826

4,646

531

155

3,798

6,327

3,476

290

1,155

781

347

277

13,170

12,819

1 Previous year’s comparative values were adjusted due to a change in the accounting method (inventories); see the notes section ‘Change in accounting method

(inventories)’.

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

C O N S O L I D A T E D
F I N A N C I A L
S T A T E M E N T S

S T A T E M E N T O F C H A N G E S I N E Q U I T Y

142

STATEMENT OF CHANGES IN EQUITY
for the financial year from 1 October 2020 to 30 September 2021

Note

no. Share capital

Capital
reserve

Effective
portion of
gains/losses
from cash
flow hedges

Fair value
measurement
of equity and
debt instru-
ments

1/10/2019

Change in accounting method
in connection with IAS 2

1/10/2019 adjusted

Earnings after taxes

Other comprehensive income

Total comprehensive income

Capital increases

Dividends

Capital transactions
with a change in the
participation rate

Other changes

363

30/9/2020 and 1/10/2020

363

Earnings after taxes

Other comprehensive income

Total comprehensive income

Capital increases

Dividends

Capital transactions
with a change in the
participation rate

Other changes

30/9/2021

6,118

−1,070

5,048

363

5,048

Currency
translation
differences
from trans-
lating the
financial
statements of
foreign oper-
ations

Remeasure-
ment of
defined
benefit
pension plans

−607

−500

−607

−468

−500

−1,076

−491

110

−2

−966

−489

−2

−3

C O N S O L I D A T E D
F I N A N C I A L
S T A T E M E N T S

S T A T E M E N T O F C H A N G E S I N E Q U I T Y

143

Share of
other
compre-
hensive
income of
associates
/joint
ventures
accounted
for using
the equity
method

−9

1/10/2019

Change in accounting method in
connection with IAS 2

1/10/2019 adjusted

Earnings after taxes

Other comprehensive income

Total comprehensive income

Capital increases

Dividends

Capital transactions
with a change in the
participation rate

Other changes

30/9/2020 and 1/10/2020

Earnings after taxes

Other comprehensive income

Total comprehensive income

Capital increases

Dividends

Capital transactions
with a change in the
participation rate

Other changes

30/9/2021

Income tax on
components of
other compre-
hensive income

Other
reserves
retained from
earnings

Total
equity
before
non-
control-
ling
interests

Total
reserves
retained
from
earnings

Non-
control-
ling
interests

Total
equity

2,345

−22

2,323

471

−466

−3,165

−4,167

2,314

−22

−3,187

−4,189

460

−466

−5

−22

2,292

460

−466

−5

−254

−7

−261

−1

1,064

1,070

−1

−28

−1,918

−3,380

2,031

−56

106

−56

106

−254

−1

−2

−1

−2,231

−3,585

1,826

−29

2,039

−45

107

−254

1,847

106

−2

−1

103

−1

106

C O N S O L I D A T E D
F I N A N C I A L
S T A T E M E N T S

C A S H F L O W S T A T E M E N T

144

CASH FLOW STATEMENT1
for the financial year from 1 October 2020 to 30 September 2021

€ million

EBIT

Depreciation/amortisation/impairment losses/reversal of impairment losses of fixed
assets excl. financial investments

Change in provisions for pensions and other provisions

Change in net working capital

Income taxes paid (−)/received

Reclassification of gains (−)/losses (+) from the disposal of fixed assets

Lease payments

Other

Cash flow from operating activities of continuing operations

Cash flow from operating activities of discontinued operations

Cash flow from operating activities

Acquisition of subsidiaries

Investments in property, plant and equipment and in investment property (excluding
right-of-use assets)

Other investments

Investments in monetary assets

Disposals of subsidiaries

Divestments

Disposal of financial investments

Cash flow from investing activities of continuing operations

Cashflow from investing activities of discontinued operations

Cash flow from investing activities

Dividends paid

to METRO AG shareholders

to other shareholders

Proceeds from new borrowings

Redemption of borrowings

Lease disbursements

Interest paid

Interest received

Other financing activities

Cash flow from financing activities of continuing operations

Cashflow from financing activities of discontinued operations

Cash flow from financing activities

Total cash flows

Currency effects on cash and cash equivalents

Total change in cash and cash equivalents

Total cash and cash equivalents as of 1 October

less cash and cash equivalents reported in assets in accordance with IFRS 5

Cash and cash equivalents as of 1 October

Total cash and cash equivalents as of 30 September

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

2019/20

2020/21

257

856

−10

−172

−140

−4

401

−180

646

416

1,062

−211

−160

−8

114

−265

1,271

1,006

−254

−7

6,066

−6,487

−547

−82

−1,280

−278

−1,557

510

−29

482

1,044

−544

500

1,525

197

969

130

−12

−37

−72

1,237

−20

−184

−146

−1

179

−137

−254

474

−779

−541

−92

−1,152

−52

−51

1,525

1,474

C O N S O L I D A T E D
F I N A N C I A L
S T A T E M E N T S

C A S H F L O W S T A T E M E N T

145

less cash and cash equivalents reported in assets in accordance with IFRS 5

Cash and cash equivalents as of 30 September

1 Reported under ‘other’ in the previous year’s annual report.

1,525

1,474

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

N O T E S

NOTES

146

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

N O T E S

S E G M E N T R E P O R T I N G

147

SEGMENT REPORTING1

METRO Germany

METRO Western
Europe (excl.
Germany)

METRO Russia

METRO Eastern
Europe (excl.
Russia)

METRO Asia

€ million

2019/
20

2020/
21

2019/
20

2020/
21

2019/
20

2020/
21

2019/
20

2020/
21

2019/
20

2020/
21

External sales (net)

4,699

4,457

9,603

9,384

2,644

2,374

7,125

7,004

1,539

1,496

Internal sales (net)

Sales (net)

4,714

4,470

9,605

9,387

2,679

2,406

7,125

7,005

1,539

1,496

Adjusted EBITDA

Transformation costs

Earnings contributions
from real estate
transactions

125

149

394

224

197

371

366

EBITDA

125

138

395

412

224

197

373

366

−38

Depreciation/
amortisation/
impairment losses

Reversals of impairment
losses

EBIT

Investments

Non-current segment
assets

Selling space
(1,000 m2)

Locations (number)

114

210

257

274

133

129

−72

114

138

213

138

347

161

138

241

107

237

−65

−123

976

875

2,531

2,581

770

799

1,468

1,412

516

451

915

103

859

1,533

1,502

682

683

1,386

1,373

206

102

240

196

218

1 Segment reporting is explained in the notes to the consolidated financial statements in no. 41 – segment reporting.

Others

Consolidation

METRO
Continuing operations

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

753

774

−5

224

−229

189

1,235

773

823

211

−120

165

1,084

−806

25,632

24,765

−821

−1

25,632

24,765

1,158

1,171

1,113

857

257

627

7,504

4,723

678

1,166

969

197

764

7,203

4,636

681

€ million

External sales (net)

Internal sales (net)

Sales (net)

Adjusted EBITDA

Transformation costs

Earnings contributions from real estate
transactions

EBITDA

Depreciation

Reversals of impairment losses

EBIT

Investments

Non-current segment assets

Selling space (1,000 m2)

Locations (number)

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

N O T E S

N O T E S T O T H E G R O U P A C C O U N T I N G P R I N C I P L E S
A N D M E T H O D S

148

NOTES TO THE GROUP ACCOUNTING PRINCIPLES AND METHODS

Accounting principles

METRO AG, the parent company of the METRO group (hereinafter referred to as METRO), is a

German corporation with registered office at METRO-Straße 1 in 40235 Düsseldorf, Germany. The

company is registered in the commercial register at the District Court in Düsseldorf under HRB

79055.

These consolidated financial statements of METRO AG as of 30 September 2021 were

prepared in accordance with the International Financial Reporting Standards (IFRS).

The consolidated financial statements in their present form comply with the stipulations of

§ 315e of the German Commercial Code (HGB). Together with Regulation (EU) No. 1606/2002 of

the European Parliament and of the Council of 19 July 2002 on the application of international

accounting standards, they form the legal basis for group accounting according to international

standards in Germany.

The date at which the Management Board of METRO AG signed the financial statement (30.

November 2021) also represents the date at which the Management Board released the

consolidated financial statements for publication and submitted them to the Supervisory Board.

The income statement has been prepared using the cost of sales method.

Assets and liabilities are recognised as current if the respective asset is expected to be

realised or the liability settled within 12 months after the reporting period.

Individual items in the income statement and the balance sheet have been combined to

increase transparency and informative value. These items are explained separately in the notes.

The consolidated financial statements are presented in euros. All amounts are stated in

million euros (€ million) unless otherwise indicated. Amounts below €0.5 million are rounded

and reported as €0 million. Individual figures may not add up to the stated sum precisely due to

rounding.

The following chapters of these notes to the consolidated financial statements show the

accounting and measurement methods that were used in the preparation of the consolidated

financial statements.

Application of new accounting methods

International Financial Reporting Standards (IFRS) applied for the first time in financial year
2020/21
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 2020/21. The initial application of these amendments has

no material impact on the consolidated financial statements:

IFRS 3 – Business Combinations (revised definition of ‘business’)

Amendments to IFRS 9 – Financial Instruments, IFRS 7 – Financial Instruments: Disclosures

and IAS 39 – Financial Instruments: Recognition and Measurement (Interest Rate Benchmark

Reform – Phase 1)

Amendments to IFRS 16 – Leases (amendment concerning Covid-19-Related Rent

Concessions beyond 30 June 2021)

Amendments to IAS 1 – Presentation of Financial Statements and IAS 8 – Accounting Policies,

Changes in Accounting Estimates and Errors (revised definition of ‘material’)

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

N O T E S

N O T E S T O T H E G R O U P A C C O U N T I N G P R I N C I P L E S
A N D M E T H O D S

149

Amendments to various IFRS standards due to adjusted references to the Conceptual

Framework for Financial Reporting)

In connection with the application of IAS 2, in June 2021 the IFRS Interpretations Committee

decided that when calculating the net realisable value of inventories, the estimated necessary

selling expenses to be taken into account should not be restricted just to incremental costs. This

decision led to a retrospective change to the corresponding accounting method at METRO.

Further information on this change is provided in no. 47 – Change in accounting method

(inventories)

page 249 .

Accounting standards that were published but are not yet applied in financial year 2020/21
A number of other standards and interpretations amended or newly issued by the IASB were not

yet applied by METRO in financial year 2020/21 because they were either not yet mandatory or

have not yet been endorsed by the European Commission.

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

N O T E S

N O T E S T O T H E G R O U P A C C O U N T I N G P R I N C I P L E S
A N D M E T H O D S

150

Standard/
Interpretation

Title

Effective
date
according
to IFRS1

Application
at
METRO AG
from2

Endorsed
by EU3

Amendments
to IFRS 1

Annual Improvements to IFRS Standards 2018–2020 (subsidiary as a
first-time adopter)

1/1/2022

1/10/2022

Yes

Amendments
to IFRS 3

Business Combinations (Reference to the Conceptual Framework)4

1/1/2022

1/10/2022

Yes

Amendments
to IFRS 4

Insurance Contracts (Extension of the Temporary Exemption from
Applying IFRS 9)

1/1/2021

1/10/2021

Yes

Amendments
to IFRS 9

Annual Improvements to IFRS Standards 2018–2020 (fees in the ‘10
per cent’ test for derecognition of financial liabilities)

1/1/2022

1/10/2022

Yes

Amendments
to IFRS 9/
IFRS 7/IFRS 16/
IAS 39

Financial Instruments (Interest Rate Benchmark Reform – Phase 2)

1/1/2021

1/10/2021

Yes

Amendments
to IFRS 10/
IAS 28

Consolidated Financial Statements/Investments in Associates and
Joint Ventures (Sale or Contribution of Assets between an Investor
and its Associate or Joint Venture)4

IFRS 17

Insurance Contracts4 – including adopted amendments to the
standard

Unknown5 Unknown5

1/1/2023

1/10/2023

Amendments
to IAS 1

Presentation of Financial Statements (Classification of Liabilities as
Current or Non-current)4

1/1/2023

1/10/2023

Amendments
to IAS 1

Presentation of Financial Statements (Disclosures Regarding
Accounting Policies)4

1/1/2023

1/10/2023

Amendments
to IAS 8

Accounting Policies, Changes in Accounting Estimates and Errors
(Definition of Accounting Estimates)4

1/1/2023

1/10/2023

Amendments
to IAS 12

Income Taxes (deferred taxes related to Assets and Liabilities arising
from a Single Transaction)4

1/1/2023

1/10/2023

Amendments
to IAS 16

Property, Plant and Equipment (Proceeds before Intended Use)

1/1/2022

1/10/2022

Yes

Amendments
to IAS 37

Provisions, Contingent Liabilities and Contingent Assets (Onerous
Contracts – Costs of Fulfilling a Contract)

1/1/2022

1/10/2022

Yes

Amendments
to IAS 41

Annual Improvements to IFRS Standards 2018–2020 (taxation in fair
value measurements).4

1/1/2022

1/10/2022

Yes

1 Without earlier application (exception: IFRS 16 – Covid-19-Related Rent Concessions).
2 Application as of 1 October due to deviation of financial year from calendar year, if the approval for use (endorsement) has been granted by the EU.
3 As of: Early November 2021.
4 Official German title not yet known – therefore own translation.
5 Indefinite deferral of effective date by IASB.

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.

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

N O T E S

N O T E S T O T H E G R O U P A C C O U N T I N G P R I N C I P L E S
A N D M E T H O D S

151

Consolidation group

Besides METRO AG, all companies indirectly or directly controlled by METRO AG are included in

the consolidated financial statements if these companies individually or as a group are not

immaterial to the consolidated financial statements. Control exists if there is a possibility to

control a company’s financial and business policy through a majority of voting rights or

according to the Articles of Association, company contract or contractual agreement in order to

benefit from this company’s business activities.

Including METRO AG, 171 German (30/9/2020: 177) and 173 international (30/9/2020: 174)

companies are included in the consolidated financial statements.

The consolidation group changed as follows in financial year 2020/21:

As of 1/10/2020

Changes in financial year 2020/21

Companies merged with other consolidated subsidiaries

Disposal of shares

Other disposals

Newly founded companies

Acquisitions

As of 30/9/2021

351

−6

−3

−9

344

Deconsolidated companies are treated as group companies up to the date of their disposal.

Effects from changes in the consolidation group that are of particular importance are explained

separately in the corresponding notes.

The acquisitions include primarily the first-time consolidation of Davigel España, S.A.U. and

the Aviludo Group.

A detailed description of the business combinations in the reporting period is provided in the notes to the business
combinations

page 172 .

The sales relate to the disposal of a real estate company and METRO’s IT companies as part of

the strategic partnership with Wipro Limited.

A detailed description of the disposal of METRO’s IT companies can be found in no. 42 – Assets held for sale and
liabilities

page 236 .

Other disposals primarily include liquidations.

Investments accounted for using the equity method
13 associated companies (30/9/2020: 25) and 9 joint ventures (30/9/2020: 9) are accounted for

in the consolidated financial statements using the equity method.

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

N O T E S

N O T E S T O T H E G R O U P A C C O U N T I N G P R I N C I P L E S
A N D M E T H O D S

152

OVERVIEW OF SUBSIDIARIES WITH SIGNIFICANT NON-CONTROLLING INTERESTS

€ million

30/9/2020

Name

Non-controlling
interests

Registered
office

in %

as of
30/9/
2020

Dividends
paid1

Non-
current
assets

Current
assets

Non-
current
liabilities

Current
liabilities

Sales
revenues

Profit
shares1

METRO Cash & Carry
Österreich GmbH

Vösendorf,
Österreich

1 Attributable to non-controlling interests.

27.00

139

144

736

€ million

30/9/2021

Name

Non-controlling
interests

Registered
office

in %

as of
30/9/
2021

Dividends
paid1

Non-
current
assets

Current
assets

Non-
current
liabilities

Current
liabilities

Sales
revenues

Profit
shares1

METRO Cash & Carry
Österreich GmbH

Vösendorf,
Österreich

1 Attributable to non-controlling interests.

27.00

165

163

196

692

A complete list of group companies and associates is shown in no. 56 – Overview of the major fully consolidated
group companies
companies of the METRO AG group as of 30 September 2021 pursuant to § 313 of the German Commercial Code

page 262 . In addition, a list of all group companies and associates is shown in no. 58 – Affiliated

page 268 .

Consolidation principles

The financial statements of German and foreign subsidiaries included in the consolidated

accounts are prepared using uniform accounting and measurement methods as required by IFRS

10 (Consolidated Financial Statements).

Subsidiaries that, unlike METRO AG, do not close their financial year on 30 September

prepared interim financial statements for consolidation purposes. In principle, subsidiaries are

fully consolidated insofar as their consolidation is of material importance to the provision of a

true and fair view of the asset, financial and earnings position.

In accordance with IFRS 3 (Business Combinations), capital consolidation is effected using

the purchase method. In the case of business combinations, the carrying amounts of the

investments are offset against the revalued pro rata equity of the subsidiaries as of their

acquisition dates. Any positive differences remaining after the allocation of hidden reserves and

liabilities are capitalised as goodwill. Goodwill is tested for impairment regularly once a year.

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In addition, in the case of company acquisitions, hidden reserves and liabilities attributable to

non-controlling interests are disclosed and recognised in equity as non-controlling interests.

In accordance with IFRS 3, any negative differences remaining after the allocation of hidden

reserves and liabilities as well as after a reassessment during the period in which the business

combination took place are recognised through profit or loss.

Acquisitions of additional equity interests in companies where a controlling interest has

already been acquired are recognised as equity transactions.

Investments in associates and joint ventures are accounted for using the equity method and

treated in accordance with the principles applying to full consolidation, with existing goodwill

being included in the amount capitalised for such investments. The disclosure of income from

investments in associates, joint ventures and joint operations in the income statement depends

on whether the investee carries out operating or non-operating activities. Operational activities

include the wholesale businesses as well as related support activities (for example rent/lease of

real estate, procurement, logistics). Income from operating associates, joint ventures and joint

operations is recognised in earnings before interest and taxes (EBIT); income from non-

operating entities is however recognised in the net financial result.

Any deviating accounting and measurement methods used in the financial statements of

entities accounted for by applying the equity method are retained as long as they do not

substantially contradict METRO’s uniform accounting and measurement methods.

According to IFRS 11 (Joint Arrangements), the individual venturers in joint operations

recognise their portion of jointly held assets and jointly incurred liabilities in their own balance

sheets.

Intra-group sales, expenses and income or profits and losses as well as receivables and

liabilities and/or provisions are eliminated. Intercompany results in fixed assets or inventories

resulting from intra-group transactions are eliminated unless they are of minor significance. In

accordance with IAS 12 (Income Taxes), deferred taxes are recognised for consolidation

procedures.

Unrealised gains from transactions with companies accounted for using the equity method

are recognised as a reduction of the carrying amount of the investment in the amount of the

group’s share of the profit.

In joint arrangements, all venturers recognise the respective portion of sales attributable to

them as well as their own income and expenses resulting from the joint arrangement in their

income statement.

If a reduction in the shareholding quota in a subsidiary or the complete disposal of the shares

entails a loss of control, full consolidation of the subsidiary is terminated when control no longer

exists. All assets and liabilities that were previously fully consolidated will then be derecognised

at amortised group carrying amounts (deconsolidation). Any investments held after the loss of

control are recognised at fair value as a financial instrument according to IFRS 9 or as an

investment according to IAS 28 using the equity method.

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Currency translation

Foreign currency transactions
In the separate financial statements of the subsidiaries and the parent company, transactions in

foreign currency are recognised at the rate prevailing on the transaction date. Monetary assets

and liabilities in foreign currency are measured at the reporting period exchange rate. Non-

monetary assets and liabilities that are measured at fair value in foreign currency are translated

at the rate prevailing at the time the fair value was determined. Non-monetary items measured

at historical acquisition or production costs in foreign currency are translated at the rate of the

transaction date.

In principle, gains and losses incurred by exchange rate fluctuations until the reporting period

are recognised in profit or loss. However, the currency translation differences resulting from the

subsequent measurement of the following assets and liabilities are reported under reserves

retained from earnings outside of profit or loss:

Receivables and liabilities in foreign currency, which must be regarded as (part of) a net

investment in a foreign operation

Equity instruments measured at fair value through other comprehensive income

Hedging instruments qualifying for cash flow hedges

Foreign operations
The annual financial statements of foreign subsidiaries are prepared according to the functional

currency concept of IAS 21 (The Effects of Changes in Foreign Exchange Rates) and translated

into euros for consolidation purposes in case their functional currency is a currency other than

the euro. The functional currency is defined as the currency of the primary economic

environment in which the subsidiary operates. Since all companies included in the consolidated

financial statements operate as financially, economically and organisationally autonomous

entities, their respective local currency is the functional currency. Necessary translations of

assets and liabilities are made at the exchange rate on the reporting period. As a general rule,

income statement items are translated at the average exchange rate during the financial year.

Exchange rate differences arising from the translation of the financial statements of foreign

subsidiaries are recognised directly in equity and are reported separately under reserves

retained from earnings in other comprehensive income. To the extent that the parent company

does not own all equity interests in foreign subsidiaries, the relevant share of currency

differences is allocated to the non-controlling interests.

Currency differences are recognised through profit or loss in the net financial result in the

year in which the operations of a foreign subsidiary whose functional currency is not the euro

are deconsolidated or terminated. In a partial disposal in which a controlling interest in such a

foreign subsidiary is retained, the relevant share of cumulated currency differences is allocated

to the non-controlling interests. Should associates or jointly controlled entities whose functional

currency is not the euro be partially sold without the loss of significant influence or joint control,

the relevant share of the cumulated currency differences is recognised in profit or loss.

In financial year 2020/21, no functional currency of a consolidated company was classified as

hyperinflationary as defined by IAS 29 (Financial Reporting in Hyperinflationary Economies).

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The following exchange rates being of major significance for METRO were applied in the

translation of key currencies outside the European Monetary Union:

Bulgarian lev

Chinese renminbi

Croatian kuna

Czech koruna

Danish krone

Egyptian pound

Hong Kong dollar

Hungarian forint

Indian rupee

Indonesian rupiah

Japanese yen

Kazakhstani tenge

Malaysian ringgit

Moldovan leu

Myanmar kyat

Norwegian krone

Pakistani rupee

Philippine peso

Polish zloty

Pound sterling

Romanian leu

Russian rouble

Serbian dinar

Singapore dollar

Swiss franc

Turkish lira

UAE dirham

Ukrainian hryvnia

US dollar

Vietnamese dong

Average exchange rate per €

2019/20

1.95583

7.84515

7.50832

2020/21

30/9/2020

30/9/2021

1.95583

7.77989

7.53955

1.95583

7.97200

7.55650

1.95583

7.48470

7.48890

26.17769

25.97336

27.23300

25.49500

7.46137

17.84167

8.70568

7.43843

18.76426

9.28025

7.44620

18.45160

9.07420

7.43600

18.18770

9.01840

343.96227

357.56318

365.53000

360.19000

82.28265

88.02535

86.29900

86.07660

16,232.86000

17,135.09000

17,497.84000

16,572.03000

120.71530

128.50236

123.76000

129.67000

451.86301

508.04742

502.14000

496.42000

4.72060

19.46755

4.92941

20.99757

4.86530

19.82730

4.84750

20.59550

1,599.26967

1,781.00822

1,532.00000

2,236.50000

10.55535

179.88229

56.30047

4.38844

0.87833

4.81183

77.50392

117.56680

1.54913

1.07494

7.29146

4.11363

29.09853

1.11982

10.36198

187.71887

58.25465

4.53714

0.87384

4.90144

89.14979

117.57386

1.60287

1.08737

9.62548

4.39049

33.08211

1.19541

11.10080

10.16500

194.33550

184.07250

56.77400

59.06600

4.54620

0.91235

4.87250

4.61970

0.86053

4.94750

91.77630

84.33910

117.58030

117.55950

1.60350

1.08040

9.09900

4.30235

33.16430

1.17080

1.57600

1.08300

10.29810

4.25075

30.82310

1.15790

25,953.36000

27,701.87000

27,131.35000

27,063.56000

BGN

CNY

HRK

CZK

DKK

EGP

HKD

HUF

INR

IDR

JPY

KZT

MYR

MDL

MMK

NOK

PKR

PHP

PLN

GBP

RON

RUB

RSD

SGD

CHF

TRY

AED

UAH

USD

VND

Income statement

Recognition of income and expenses
Net sales are recognised in accordance with IFRS 15 (Revenue from Contracts with Customers)

when the respective performance obligations have been satisfied by transferring goods to

wholesale customers or providing services. The goods are deemed to have been transferred at

the time at which the customer gains control over them. This applies to store-based wholesale

as well as to the delivery business (Food Service Distribution, FSD). In these cases, cash

payment or payment within a short time after delivery of the product (credit purchase) is usually

agreed with the customer. Significant financing components are usually not included in the

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contracts with customers. For services, control over the services is transferred over time, thus

satisfying the performance obligation. Revenue is recognised in the amount of the consideration

received or expected to be received in exchange for the goods or services.

Under certain wholesale business models, METRO customers are granted the right to

exchange or return goods under certain conditions or in accordance with contractual

agreements or on a legal basis. Refund liabilities that are based on empirical data regarding

return quotas and periods are recorded for expected returns in this context. Assets for the right

to recover products from a customer upon settling these refund liabilities are measured at the

initial carrying amount of the respective inventories (less settlement costs and any indicated

impairment) and reported under other assets.

METRO grants various types of standardised, performance-based rebates if certain

predefined conditions are met. Examples include rebates for achieving certain sales volumes

with a customer and for customer loyalty. As soon as it can be assumed that a customer fulfils

the conditions for granting the rebate, a portion of the revenue is deferred and presented as a

contract liability. Such contract liabilities are derecognised when the rebate is redeemed by the

customer or when the probability that the customer will enforce its rights is remote. The rebates

are regularly redeemed by customers within one year of the respective recognition of a contract

liability.

Some of the franchise models offered by METRO include multi-component contracts with

customers being offered a bundle of different franchise products and services. Individual

contractual components are made available to customers in a subsidised form, so that the entire

agreed consideration is allocated to the individual components in accordance with the relative

stand-alone selling prices.

In some cases, METRO acts as an agent for the delivery of goods or the provision of services.

In these cases, METRO recognises the expected fee or commission as revenue.

Operating expenses are recognised as expenses upon utilisation of the service or on the date

of their causation.

METRO’s financial result consists primarily of interest income and expenses. Interest is

recognised as income or expenses on an accrual basis and, where applicable, using the effective

interest method. Interest expense on borrowings that is directly attributable to the acquisition or

production of a so-called qualified asset represents an exception, as it is included in the

acquisition or production costs of the asset capitalised pursuant to IAS 23 (Borrowing Costs).

Dividends paid by companies in which METRO holds an interest and which are not accounted for

using the equity method are generally recognised as income when the legal claim to payment

arises.

Income taxes
Income taxes concern current and deferred taxes. As a general rule, they are recognised through

profit or loss unless they are related to business combinations or an item that is directly

recognised in equity or other comprehensive income.

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Balance sheet

Goodwill
Goodwill is regularly tested for impairment once a year on 30 June – or more frequently if there

are indications for a possible impairment. If an impairment occurred, an impairment loss is

recognised through profit or loss. To determine a possible impairment, the recoverable amount

of a cash-generating unit is compared to the corresponding carrying amount of the cash-

generating unit. The recoverable amount is the higher of the value in use and the fair value less

costs of disposal. An impairment of the goodwill allocated to a cash-generating unit occurs only

if the recoverable amount is lower than the total amount of the unit’s relevant carrying amount.

No reversal of an impairment loss is recognised if the reasons for the impairment in previous

years have ceased to exist.

Other intangible assets
Purchased other intangible assets are recognised at cost of purchase. In accordance with IAS 38

(Intangible Assets), internally generated intangible assets are recognised at their production

cost. Research costs, in contrast, are not recognised as assets, but recognised as expenses when

they are incurred. The production costs include all expenditures directly attributable to the

development process, unless they are explicitly excluded from being a component of the cost of

an internally generated intangible asset.

Direct costs

Overhead
(directly attributable)

Direct material costs

Direct production costs

Special direct production costs

Material overhead

Production overhead

Depreciation/amortisation/impairment losses

Development-related administrative costs

Borrowing costs are factored into the determination of production costs only in case the

intangible asset is a so-called qualified asset pursuant to IAS 23 (Borrowing Costs). Qualified

assets are defined as non-financial assets that take a substantial period of time to be prepared

for their intended use or sale.

All other intangible assets with a finite useful life are subject to straight-line amortisation.

Capitalised internally created and purchased software as well as similar intangible assets are

amortised over a period of up to 10 years, while licences are amortised over their useful lives.

Intangible assets with an indefinite expected useful life are not subject to scheduled

amortisation, but are subject to impairment testing at least once a year. Impairment losses and

reversed impairment losses are recognised through profit or loss in consideration of the

historical cost principle.

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Property, plant and equipment
Property, plant and equipment are recognised at acquisition or production costs according to

IAS 16 (Property, Plant and Equipment). The production costs of internally generated assets

include both direct costs and directly attributable overhead costs. Borrowing costs are only

capitalised in relation to so-called qualified assets as a component of acquisition or production

costs. In line with IAS 20 (Accounting for Government Grants and Disclosure of Government

Assistance), investment grants received are offset against the acquisition or production costs of

the corresponding asset. Dismantling and removing obligations are included in the acquisition or

production costs at the discounted settlement amount. Subsequent acquisition or production

costs of property, plant and equipment are only capitalised if they result in a higher future

economic benefit of the tangible asset.

Property, plant and equipment are solely depreciated on a straight-line basis. Throughout the

group, depreciation is based on the following expected useful lives:

Buildings

Leasehold improvements

Business and office equipment

Machinery

10 to 33 years

8 to 15 years or shorter lease term

3 to 13 years

3 to 8 years

In a few justified exceptional cases, the expected useful life of buildings is 40 years.

Capitalised costs of dismantling and removing are depreciated over the expected useful life

of the asset.

According to IAS 36 (Impairment of Assets), an impairment test will be carried out if there

are any indications of impairment of property, plant and equipment or of a cash-generating unit

(CGU). Impairment losses are recognised if the recoverable amount is less than its carrying

amount. If the reasons for the impairment have ceased to exist, impairment losses are reversed

up to the amount of amortised acquisition or production costs had no impairment loss been

recognised in previous periods.

Rights-of-use
Rights-of-use are measured at acquisition costs at the time of addition, which include the

amount of the lease liability at initial measurement as well as all lease payments made at or

before the time when the underlying asset is made available for use, minus any lease incentives

that were received. Moreover, they include initial direct costs and estimated costs for

dismantling and removing obligations, if applicable. The rights of use are amortised on a

straight-line basis over the shorter of the lease term or the useful life of the underlying asset.

Furthermore, the acquisition costs of the rights of use are reduced by any impairment losses to

be recognised.

The amortised costs are adjusted if corresponding revaluations must be made.

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Investment properties
In accordance with IAS 40 (Investment Property), investment properties include real estate

assets that are held to earn rentals or for capital appreciation, or both. Analogous to property,

plant and equipment, such assets are recognised at acquisition or production costs less

depreciation and, if required, impairment losses (cost model). Owned investment properties are

depreciated using the straight-line method, considering an expected useful life of 15 to 33 years.

Investment properties where rights of use are involved are depreciated on a straight-line basis

over a useful life of 5 to 15 years. In addition, the fair value of these real estates is determined

based on accepted valuation methods, taking into account project development opportunities.

The fair values are disclosed in the notes.

Financial assets
Unless associated companies or joint ventures as defined by IAS 28 (Investments in Associates

and Joint Ventures) are involved, to which the equity method is applied, financial assets are

accounted for in accordance with the provisions of IFRS 9 (Financial Instruments).

Financial assets are recognised in the consolidated balance sheet when METRO becomes a

contractual party to a financial instrument. Recognition is effected at the trade date. Financial

assets are derecognised if the contractual rights to payments from the financial assets no longer

exist or the financial assets with all material risks and rewards are transferred to another party

and METRO cannot control the financial assets after the transfer. When the uncollectability of

receivables is finally determined, they are derecognised.

Financial assets are measured at fair value upon initial recognition. In doing so, the

transaction costs directly attributable to the acquisition must be taken into account, unless the

financial instruments are subsequently measured at fair value through profit or loss.

The subsequent measurement of financial assets is based on the classification of the

respective financial asset to one of the categories described below. The classification is

determined based on whether the so-called cash flow characteristics are met and on the basis of

the business model used to manage the respective financial asset (or a portfolio of financial

assets). The cash flow characteristics are met if the contractual terms of the financial asset give

rise on specified dates to cash flows that are solely payments of principal and interest on the

principal amount outstanding. With regard to potential business models, a distinction must be

made for these financial assets meeting the cash flow characteristics between the objectives

to either hold the financial asset in order to collect contractual cash flows (hold)

or to both hold them in order to collect contractual cash flows and sell them (hold and sell).

Using these classification criteria, the individual financial asset is assigned to one of the

following classes at initial recognition:

Measured at amortised cost (AC), provided the ‘hold’ criterion is met

Measured at fair value through other comprehensive income (FVOCI), if the ‘hold and sell’

criterion is met

Measured at fair value through profit or loss (FVPL) in all other cases

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Derivative financial instruments that are not designated as part of a hedge accounting

relationship for accounting purposes are measured at fair value.

METRO does not make use of the option to measure financial assets at fair value through

profit or loss upon initial recognition (fair value option).

With regard to the financial assets recognised at amortised cost (AC), impairments are

recognised as expected losses, regardless of the existence of actual default events. All

reasonable and reliable information is considered for determination of the impairment rates,

including forward-looking information, which is taken into account by including a projected

index based on macroeconomic developments. However, if there is objective evidence that

contractually agreed cash flows of a financial asset are likely to partially or completely default,

they are recorded as specific bad debt allowances. If these indications cease to exist, impairment

losses are reversed up to the amount of the carrying amount that would have resulted if no

default event had occurred. METRO determines the expected losses on trade receivables using

the so-called simplified approach by using a provision matrix structured according to various

(past-due) maturities. Expected losses for other financial assets are determined in accordance

with the so-called general approach. Impairment losses are generally recognised in separate

accounts.

Changes in the fair value of financial assets measured at fair value through other

comprehensive income (FVOCI) are recognised in other comprehensive income and reclassified

to the income statement when the assets are sold. Impairment losses on financial assets in the

FVOCI category are determined in the same way as impairment losses on financial assets in the

AC category and recognised in profit or loss.

In accordance with the provisions of IFRS 9, own equity instruments are either measured at

fair value through profit or loss (FVPL) or at fair value through other comprehensive income

without reclassification (FVOCInR).

As part of cash flow hedging, which continues to be accounted for in accordance with IAS 39,

METRO hedges the exposure to variability in future cash flows. For this purpose, future

transactions and related hedging instruments are designated as hedging relationships for

accounting purposes. The effective portion of changes in the fair value of the hedging

instrument that regularly meets the definition criteria of a derivative is initially recognised

directly in equity under consideration of deferred taxes. The ineffective portion is recognised

directly in profit or loss. For future transactions that result in the recognition of a non-financial

asset or a non-financial liability, the cumulative changes in the fair value of the hedging

instrument are removed from other comprehensive income and included in the initial cost of the

other carrying amount of the asset or liability. In case the hedging transaction relates to financial

assets, financial liabilities or future transactions, the changes in fair value of the hedging

instrument are transferred from other comprehensive income to profit or loss in the reporting

period in which the hedged item is recognised in the income statement. The term of the hedging

instrument is aligned to coincide with the occurrence of the future transaction.

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Other financial and other non-financial assets
The assets presented under other financial assets are generally measured at amortised cost, and

impairments are determined for the reporting period in accordance with the general approach to

determine expected credit losses.

Other financial assets also include derivative financial instruments that are measured at fair

value through profit or loss.

Deferred income presented pertains to transitorily deferred charges.

Deferred tax assets and deferred tax liabilities
Deferred tax assets and deferred tax liabilities are determined using the asset-liability method in

accordance with IAS 12 (Income Taxes). Deferred tax assets and liabilities are recognised for

temporary differences between the carrying amounts of these assets or liabilities in the

consolidated financial statements and their tax base. Deferred tax assets are also considered for

unused tax losses and interest carry-forwards.

Deferred tax assets are recognised only to the extent that it is probable that sufficient taxable

profit will be available in the future to allow the corresponding benefit of that deferred tax asset

to be realised.

Deferred tax assets and deferred tax liabilities are netted if these income tax assets and

liabilities concern the same tax authority and refer to the same tax subject or a group of

different tax subjects that are jointly assessed for income tax purposes. Deferred tax assets are

remeasured at the end of each reporting period and adjusted if necessary.

Deferred taxes are determined on the basis of the tax rates expected in each country upon

realisation. In principle, these are based on enacted laws or legislation that has been passed at

the time of the reporting period.

The assessment of deferred taxes reflects the tax consequence arising from METRO’s

expectations as of the reporting period with regard to the manner in which the carrying

amounts of the assets will be realised or the liabilities will be settled.

Inventories
In accordance with IAS 2 (Inventories), merchandise held as inventories is recognised at cost of

purchase. The cost of purchase is determined either on the basis of a separate measurement of

additions or by means of the weighted average cost method. Considerations from suppliers to

be classified as a reduction in the cost of purchase are deducted when the costs of acquisition

are determined.

Merchandise is measured as of the reporting period at the lower of cost or net realisable

value. Merchandise is written down on a case-by-case basis if the net realisable value declines

below the carrying amount of the inventories. Such net realisable value corresponds to the

anticipated estimated selling price less the costs necessary to make the sale.

When the reasons for a write-down of the merchandise have ceased to exist, the previously

recognised impairment loss is reversed.

Trade receivables
Trade receivables are recognised at amortised cost. For the reporting period, expected

impairments determined on the basis of a provision matrix are taken into account. If there are

further doubts about their recoverability, the trade receivables are recognised at the lower

present value of the estimated future cash flows.

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Income tax assets and liabilities
The income tax assets and liabilities presented relate to domestic and foreign income taxes for

the reporting period as well as prior periods. They are determined in compliance with the tax

laws of the respective country.

Income tax liabilities are calculated in accordance with the provisions of IFRIC 23. IFRIC 23

clarifies the application of recognition and measurement requirements under IAS 12 where there

is uncertainty about the treatment of income tax. Recognition and measurement requires

estimates and assumptions to be made, for example whether an estimate is made separately or

together with other uncertainties, whether a probable or expected value for the uncertainty is

used, and whether changes have occurred compared to the previous period. The detection risk

is irrelevant for the accounting treatment of uncertain balance sheet items. Accounting is based

on the assumption that the tax authorities will investigate the matter in question and that they

have all relevant information at their disposal.

The group companies are subject to income taxes in various countries worldwide. In assessing

the worldwide income tax assets and liabilities, the interpretation of tax regulations in particular

may be subject to uncertainty. It cannot be ruled out that the respective tax authorities may

have different views on the correct interpretation of tax regulations. Changes in assumptions

about the correct interpretation of tax standards, for example due to changes in case law, are

reflected in the accounting treatment of uncertain income tax assets and liabilities in the

relevant financial year.

Cash and cash equivalents
Cash and cash equivalents comprise cheques, cash on hand, bank deposits and other short-term

liquid financial assets, such as accessible deposits on lawyer trust accounts or cash in transit,

with an original term of up to 3 months. They are measured at their respective nominal values.

Non-current assets held for sale, liabilities related to assets held for sale and discontinued
operations
In accordance with IFRS 5 (Non-current Assets Held for Sale and Discontinued Operations), an

asset is classified as a non-current asset held for sale if the respective carrying amount will be

recovered principally through a sale transaction rather than through continuing use.

Analogously, liabilities related to assets held for sale are presented separately in the balance

sheet. A sale must be feasible in practice and be planned for execution within the subsequent 12

months. Immediately before the initial classification of the assets and liabilities as held for sale,

the carrying amounts of the assets and liabilities are measured in accordance with applicable

IFRS. In case of reclassification, the assets and liabilities of the disposal group are measured at

the lower of their carrying amount and the fair value less costs of disposal and are reported

separately in the balance sheet. Discontinued operations are a component of an entity that

either has been disposed of or is classified as held for sale and represents a separate major line

of business or a separate geographical area of operations.

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Employee benefits
Employee benefits include:

Short-term employee benefits

Post-employment benefits

Obligations similar to pensions

Termination benefits

Share-based payment

Short-term employee benefits include, for example, wages and salaries, social security

contributions, paid annual leave and paid sick leave and are recognised as liabilities at the

amount (to be) disbursed as soon as the associated job performance has been rendered.

Post-employment benefits are provided in the context of defined benefit or defined

contribution plans. In the case of defined contribution plans, the obligation to make periodic

contributions to an external pension provider is recognised as expenses for post-employment

benefits at the same time as the beneficiaries provide their service. Missed payments or

prepayments to the external pension provider are accrued or deferred as liabilities or

receivables. Liabilities with a term of over 12 months are discounted.

The actuarial measurement of pension provisions for post-employment benefits plans as part

of a defined benefit plan is effected in accordance with the projected unit credit method as

stipulated by IAS 19 (Employee Benefits) on the basis of actuarial reports. Based on biometric

data, this method takes into account known pensions and pension entitlements at the reporting

period as well as expected increases in future wages and pensions. Where the employee benefit

obligations determined or the fair value of the plan assets increase or decrease between the

beginning and end of a financial year as a result of experience adjustments (for example a

changed fluctuation rate) or changes in underlying actuarial assumptions, this will result in

actuarial gains and losses. These are recognised in other comprehensive income outside of profit

or loss. Effects of plan changes and curtailments are recognised fully under service costs

through profit or loss. The interest element of the addition to the provision is presented as

interest expenses as part of the financial result. Insofar as plan assets exist, the amount of the

pension obligation is generally the result of the difference between the present value of defined

benefit obligations and the fair value of the plan assets.

Provisions for obligations similar to pensions (such as anniversary allowances and death

benefits) are based on the present value of future payment obligations to the employee or his or

her surviving dependants less any associated assets measured at fair value. The amount of

provisions is determined on the basis of actuarial reports in line with IAS 19. Actuarial gains and

losses are recognised in the period in which they are incurred.

Termination benefits comprise severance payments to employees. They are recognised as

liabilities through profit or loss when contractual or factual payment obligations towards the

employee are to be made in relation to the termination of the employment relationship. Such an

obligation exists when a formal plan for the early termination of the employment relationship is

available to which the company is bound. Benefits with terms of more than 12 months after the

reporting period are recognised at their present value.

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The share bonuses granted under the share-based remuneration system are classified as

cash-settled share-based payments in accordance with IFRS 2 (Share-based Payment). For

these share-based payments, provisions are set up on a pro rata basis, measured at the fair value

of the obligations entered into. The recognition of the provision follows a prorated approach

over the underlying vesting period and is recognised in profit or loss as personnel expenses. The

fair value is remeasured at each reporting period during the vesting period based on an option

pricing model. Provisions are adjusted accordingly through profit or loss.

(Other) provisions
In accordance with IAS 37 (Provisions, Contingent Liabilities and Contingent Assets), (other)

provisions are recognised if legal or constructive obligations to third parties exist that are based

on past business transactions or events and an outflow of financial resources that can be reliably

measured is probable. The provisions are stated at the anticipated settlement amount with

regard to all identifiable risks considered.

Long-term provisions with a term of more than 1 year are discounted to the reporting period

using an interest rate for matching maturities reflecting current market expectations regarding

interest rate effects. Provisions with a term of less than 1 year are discounted accordingly, if the

interest rate effect is material. Claims for recourse are not netted with provisions, but recognised

separately as an asset if their realisation is considered virtually certain.

Provisions for onerous contracts are recognised if the unavoidable costs of meeting the

obligations under a contract exceed the expected economic benefits resulting from the contract.

Provisions for restructurings are recognised if a constructive obligation for restructuring has

been formalised by means of adopting a detailed restructuring plan and its communication vis-

à-vis to those employees affected as of the reporting period.

Recognition of warranty provisions that do not fall into the scope of IFRS 15 (Revenue from

Contracts with Customers) are based on past warranty claims and the sales of the current

financial year.

(Other) financial liabilities
In accordance with IFRS 9, financial liabilities are assigned to one of the following categories:

At fair value through profit or loss

Other financial liabilities

The initial recognition of financial liabilities and the subsequent measurement of financial

liabilities at fair value through profit or loss are conducted in analogy to the corresponding

guidance as it is applied to financial assets.

All other financial liabilities are presented as such. They are measured at their amortised cost

using the effective interest method.

The fair value option according to IFRS 9 is not applied to financial liabilities at METRO.

The fair values provided for the financial liabilities in the notes have been determined on the

basis of the interest rates prevailing on the reporting period for the remaining terms and

redemption structures.

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Financial liabilities from finance leases are generally measured at the present value of future

minimum lease payments.

A financial liability is derecognised only when it has expired or when the contractual

obligations have been discharged or cancelled or have expired.

Other non-financial liabilities
Other non-financial liabilities are carried at their repayment amount.

Deferred income presented pertains to transitorily deferred charges.

Trade liabilities
Trade liabilities are recognised at amortised cost.

Leases
Under IFRS 16, a contract is a lease or includes a lease when it conveys the right to use an

identified asset for a specified period in exchange for a consideration.

Exercising of options
Various options are available to lessees. METRO did not make use of the option of creating a

portfolio of leases with the same or similar characteristics for accounting and measurement

purposes. However, METRO exercises the option to not apply the right-of-use approach to leases

for which the underlying asset is of low value (mainly business and office equipment) or to

short-term leases (maximum term of 12 months). Rental expenses for these assets are therefore

recognised directly in the income statement.

The option to separate lease and non-lease components (services) is not exercised and the

non-lease components are included in the right-of-use assets to be recognised.

Furthermore, the option to capitalise leased intangible assets was not exercised. These assets

still fall within the scope of IAS 38.

METRO as lessee
The company recognises an asset with a right of use and a lease liability at the inception of the

lease. The right of use is initially measured at cost, which is the initial amount of the lease

liability, adjusted for any lease payments made on or before the commencement date, plus any

initially incurred direct costs, less any incentives received. The right of use is subsequently

amortised on a straight-line basis over the shorter lease term or the useful life of the underlying

asset. In addition, the right of use is reduced by any impairment losses and adjusted for certain

remeasurements of the lease liabilities. The lease liability is initially measured at the present

value of the lease payments, which are discounted at the interest rate inherent in the lease

agreement; if this interest rate cannot be readily determined, they are discounted at the

incremental borrowing rate that the company would have to pay for borrowing funds to acquire

an asset of similar value in a similar economic environment. To determine the incremental

borrowing rate, METRO uses country- and currency-specific reference interest rates based on

risk-free rates with matching maturities, plus the credit risk premium. This is determined for each

country on a quarterly basis and is broken down by maturity.

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The lease payments included in the measurement of the lease liability consist of the following

items:

Fixed payments, including substantially fixed payments

Variable lease payments that depend on an index or instalment, which are initially measured

using the index or instalment on the starting date

Amounts expected to be paid under a residual value guarantee

Exercise price of a purchase option that the company expects to be exercised with

reasonable certainty

Lease payments in an optional extension period, if it is reasonably certain that the company

will exercise an extension option

Penalties for early termination of a lease, unless the company is reasonably certain that it will

not terminate the lease prematurely.

The lease liability is measured at amortised cost using the effective interest method. It is

remeasured if the future lease payments change as a result of a change in the index or interest

rate, if the company’s estimate of the amount expected to be payable under a residual value

guarantee changes, or if the company changes its assessment of whether it will exercise a

purchase, renewal or termination option. If the lease liability is remeasured in this way, a

corresponding adjustment to the carrying amount of the right of use is made or recognised in

the income statement if the carrying amount of the right of use is reduced to 0. Rights of use

are recognised in the balance sheet under property, plant and equipment. Rights of use that

meet the definition of investment property are included under ‘Investment properties’ and are

recognised separately in the financial statements. Lease liabilities are included in ‘Other current

financial liabilities’ and ‘Other non-current financial liabilities’.

In the cash flow statement, the company has classified the redemption of lease payments and

the interest portion within financing activities. Lease payments are divided into a redemption

and an interest portion and are included in the cash flow statement in the line ‘Lease

disbursements’. Lease payments for short-term leases, lease payments for leases of low-value

assets and variable lease payments not included in the measurement of the lease liability are

classified as cash flows from operating activities.

METRO as lessor
The accounting policies that applied to METRO as a lessor under the previous standard do not

differ materially from the new rules under IFRS 16. However, there are differences with regard to

subleases, which are classified under IFRS 16 with reference to the right of use and not, as

previously, by reference to the underlying asset. As a result, the number of subleases classified

as finance leases has risen, and the amount of receivables to be reported in the balance sheet

has increased accordingly.

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Even if the company is the lessor in a sublease, it determines at the inception of the lease

whether each lease is a finance lease or an operating lease. To classify each lease, the company

makes an overall assessment of whether the lease generally transfers all the risks and benefits

associated with ownership of the underlying asset. If this is the case, the lease is a finance lease;

otherwise, it is an operating lease. As part of this assessment, the company considers certain

indicators, for example, whether the lease covers most of the lease term of the main lease of the

asset.

If the lease is a finance lease, a net investment (receivable) equal to the discounted future

lease payments to be received is recognised in the balance sheet. The interest rate underlying

the lease is used to determine the discount. Interest income from leases is recognised in cash

flow from operating activities.

If the company is an intermediate lessor, it accounts for its interest in the main lease

agreement and the sublease agreement separately. If a main lease is a short-term lease to which

the company applies the exception described above, the company classifies the sublease as an

operating lease. The company recognises lease payments it receives under operating leases as

rental income.

Sale-and-leaseback transactions
If a sale and leaseback transaction involves the sale of the asset as defined by IFRS 15 (Revenue

from Contracts with Customers), the lessee (seller) must derecognise the asset and recognise

any gain or loss relating to the rights transferred to the lessor (buyer).

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Other

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Contingent liabilities
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 hedge accounting

relationship are measured at fair value in accordance with IFRS 9 and presented under other

financial assets or other financial liabilities.

Derivative financial instruments are measured on the basis of interbank terms and conditions,

including the credit margin or stock exchange prices applicable to METRO where appropriate –

in this respect, the average rate on the closing period 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.

Considerations from suppliers
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 period insofar as they

have been contractually agreed and their collection is likely to be realised. For supplier

remunerations of METRO’s costs linked to calendar year targets, the considerations from

suppliers included in the financial statement is based on appropriate extrapolations.

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Estimates and assumptions, discretionary judgements

Due to the Covid-19 pandemic, particular challenges arose with regards to estimates and

assumptions. Public life in many countries where METRO operates has been severely restricted

as a result of the pandemic and the associated regulatory measures – in particular, the measures

had a significant negative impact on some of our customer groups (especially hospitality

industry customers) and, consequently, also on our business. The situation did not stabilise until

Q3 and especially Q4. However, it is currently not possible to make a reliable estimate as to

whether significant public restrictions will be necessary again and how long it will subsequently

take to return to normal.

Estimates and assumptions
The preparation of these consolidated financial statements was based on estimates and

assumptions, taking into account the changes in the business environment described above,

which affected the disclosure and amount of assets and liabilities, income and expenses and

contingent liabilities. Estimates and underlying assumptions with major effects were particularly

made in connection with the Covid-19 pandemic with respect to the following situations:

Impairment testing of assets with and without a definite useful life, including goodwill, brand

rights with indefinite useful lives, and customer bases, including a sensitivity analysis in each

case. Meanwhile, potential short-term impairments to earnings have no impact on the existing

carrying amounts of goodwill.

Recoverability of receivables – in particular trade receivables and receivables due from

suppliers. Increased specific bad debt allowances were provided for when measuring

receivables, particularly in units with longer payment terms and a high exposure to the

HoReCa sector.

Measurement of inventories, particularly with regard to write-downs to lower net realisable

values.

Calculation of provisions for performance-based remuneration components. Provisions for

performance-based remuneration components were also calculated on the basis of corporate

plans using current market parameters such as the performance of share prices and

benchmark indices.

In addition, information on estimates and underlying assumptions with significant effects on

these consolidated financial statements relates to the following circumstances or is included in

the following notes:

Uniform group-wide determination of expected useful lives for assets with a definite useful

life (no. 15 – Depreciation/amortisation/impairment losses

page 183 , no. 20 – Other

intangible assets

page 189 and no. 21 – Property, plant and equipment

page 190 )

Indicator-based impairment testing of assets with a definite useful life (no. 15 – Depreciation/

amortisation/impairment losses

page 183 , no. 20 – Other intangible assets

page 189

and no. 21 –Property, plant and equipment

page 190 )

Recoverability of receivables due from suppliers with respect to considerations from suppliers

(no. 24 – Other financial and other non-financial assets

page 198 )

Recognition of considerations from suppliers on an accrual basis and their presentation in the

income statement (no. 24 – Other financial and other non-financial assets

page 198 )

Ability to realise future deferred tax assets – particularly from tax loss carry-forwards (no. 25

– Deferred tax assets/deferred tax liabilities

page 198 )

Determination of provisions for post-employment benefits plans (no. 31 – Provisions for post-

employment benefits plans and similar obligations

page 210 )

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Determination of other provisions and other liabilities – for example, for performance

obligations, restructuring, warranties, taxes and risks emerging from legal proceedings and

litigation as well as risks from completed transactions (no. 32 – Other provisions (non-

current)/provisions (current)

page 218 , no. 36 – Other financial and other non-financial

liabilities

page 224 )

Determination of lease terms, taking into account relevant facts and circumstances relating to

economic incentives affecting the likelihood of tenants exercising renewal options or not

exercising termination options, as well as determination of the incremental borrowing rate

(no. 21 – Property, plant and equipment

page 190 ).

Although great care has been taken in making these estimates and assumptions, actual

measurements may deviate from them in individual cases and especially considering

Covid-19-related uncertainties. The estimates and assumptions used in the consolidated financial

statements are regularly reviewed. Changes are taken into account at the time new information

becomes available.

Judgemental decisions
Information on the key judgemental decisions that materially affected the amounts reported in

these consolidated financial statements relates to the following circumstances or note

disclosures:

Determination whether METRO is the principal or agent in sales transactions (no. 1 – Sales

revenues

page 175 )

Determination of the group of investments accounted for at equity by assessing the

significant influence

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171

CAPITAL MANAGEMENT

The aim of the capital management strategy of METRO is to secure the company’s business

operations to continue, to increase the value of the company, to create solid capital resources to

finance future growth and to provide for attractive dividend payments and capital service.

The capital management strategy of METRO has remained unchanged compared with the

previous year.

Equity, liabilities and net debt in the consolidated financial statements

The total equity before non-controlling interests amounts to €1,826 million (30/9/2020:

€2,031 million), while liabilities amount to €10,972 million (30/9/2020: €11,131 million). Net debt

decreased by €304 million and amounts to €3,466 million (30/9/2020: €3,771 million).

€ million

Equity before non-controlling interests

Liabilities

Net debt

Financial liabilities (incl. liabilities from leases)

Cash and cash equivalents

Short-term financial investments2

30/9/20201

30/9/2021

2,031

11,131

3,771

5,314

1,525

1,826

10,972

3,466

4,954

1,474

1 Previous year’s comparative values were adjusted due to a change in the accounting method (inventories); see the notes section ‘Change in accounting method

(inventories)’.

2 Included in the balance sheet in other financial assets (current).

Local capital requirements

The capital management strategy of METRO consistently aims to ensure that the group

companies’ capital resources meet the local requirements. During financial year 2020/21, all

external capital requirements were met. This includes, for example, adherence to a defined level

of indebtedness and a fixed equity ratio.

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NOTES TO THE BUSINESS COMBINATIONS

Davigel España, S.A.U.

Pursuant to the purchase contract dated 30 December 2020, METRO Cash & Carry International

Holding B.V. acquired 100% of the shares in Davigel España, S.A.U. (Davigel) as of 30 December

2020 from SYSCO FRANCE SAS (Sysco), France. The purchase price agreed and paid was less

than €1 million. Davigel is an established food service distribution (FSD) company in Spain with

a strong presence in the Balearic Islands as well as the Canary Islands. More than 70% of all

customers are hotel chains, while independent restaurateurs and HoReCa operations account for

about 30% of sales. The transaction is of high strategic relevance for METRO in Spain, since

Davigel provides access to new customers. It also secures exclusive rights for certain articles

from Sysco’s product range.

The initial consolidation was carried out as of 1 January 2021. Davigel is part of the segment

METRO Western Europe (excl. Germany).

The fair values of the acquired assets and liabilities assumed as of the acquisition date were

as follows:

ACQUIRED ASSETS AND LIABILITIES

€ million

Assets

Property, plant and equipment

Deferred tax assets

Inventories

Trade receivables

Cash and cash equivalents

Liabilities

Borrowings (non-current)

Deferred tax liabilities

Trade liabilities

Borrowings (current)

Other financial liabilities (current)

1/1/2021

The gross amount of trade receivables is €3 million, of which €1 million was assessed as

probably uncollectible at the time of the acquisition.

Costs of significantly less than €1 million were incurred in connection with the transaction and

are included in other operating expenses.

The acquisition of Davigel resulted in negative goodwill of €7 million, which was recognised

in full as other operating income in financial year 2020/21. The negative goodwill results from

the challenging market conditions due to the Covid-19 pandemic, which significantly affect

Davigel’s main customers in the hotel and hospitality industry and were recognised by reducing

the purchase price accordingly.

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Since the initial consolidation date of 1 January 2021, Davigel has contributed €13 million to

METRO’s sales but reduced its profit or loss for the period by €1 million (excluding the

recognition of negative goodwill).

Assuming that the acquisition had taken place on 1 October 2020, Davigel would have

contributed €16 million to METRO’s sales and reduced its profit or loss for the period by

€3 million (excluding the recognition of negative goodwill).

The government measures based on the Covid-19 pandemic had a massively negative impact

on Davigel’s sales and earnings development.

Aviludo Group

Pursuant to the purchase contract dated 16 October 2020, METRO FSD HOLDING PORTUGAL,

SGPS, S.A. acquired the following companies (Aviludo Group) from AVILUDO SGPS, S.A.,

Portugal, on 28 February 2021:

Aviludo – Indústria e Comércio de Produtos Alimentares, S.A. (100%)

ATLA – Logística, S.A. (100%)

LUDOFOODS, S.A. (100%)

FOOD GO – Import Export, LDA (100%)

X4DEV – Business Solutions, S.A. (71%)

The purchase price agreed and paid was in the low double-digit millions of euros. With a strong

presence in Lisbon and the tourist-oriented south of Portugal, the Aviludo Group has expertise

in meat processing and is known for its consistent quality and customer service standards. The

Aviludo Group is the second-largest Portuguese food supplier, specialising in independent

restaurateurs, canteens and restaurant chains. This acquisition is a decisive step towards a

complete focus on HoReCa customers. The resulting access to complementary HoReCa

customer groups boosts METRO’s position in the growing FSD segment and simultaneously

creates an additional assortment for local customers.

The initial consolidation was carried out as of 1 March 2021. The Aviludo Group is part of the

segment METRO Western Europe (excl. Germany).

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174

The fair values of the acquired assets and liabilities of the consolidated group as of the

acquisition date were as follows:

ACQUIRED ASSETS AND LIABILITIES

€ million

Assets

Other intangible assets

Property, plant and equipment

Inventories

Trade receivables

Other non-financial assets

Cash and cash equivalents

Liabilities

Borrowings (non-current)

Deferred tax liabilities

Trade liabilities

Borrowings (current)

Other financial liabilities (current)

Other non-financial liabilities (current)

1/3/2021

The licence price analogy method as well as the residual value method were used to determine

the fair values of the acquired intangible assets. The licence price analogy method recognises

the discounted estimated payments of usage fees that are expected to be saved by owning the

rights to the names. The residual value method is based on the present value of the expected

net cash flows generated by the customer relationships, excluding any cash flows associated

with supporting assets.

The gross amount of trade receivables is €5 million, of which €1 million was assessed as

probably uncollectible at the time of the acquisition.

Costs of €2 million were incurred in connection with the transaction (thereof €1 million in

financial year 2019/20) and are included in other operating expenses.

The acquisition of the Aviludo Group resulted in goodwill of €7 million, which is mainly

attributable to the future earnings potential arising from expected synergy effects with the

wholesale business of MAKRO Portugal. Part of the expected synergy effects is attributable to

the cash-generating unit MAKRO Cash & Carry Portugal; consequently, an amount of €3 million

was allocated to it. The recognised goodwill is not deductible for tax purposes.

Since its initial consolidation on 1 March 2021, the Aviludo Group has contributed €74 million

to METRO’s sales and €0 million to profit or loss for the period.

Assuming that the acquisition had taken place on 1 October 2020, the Aviludo Group would

have contributed €104 million to METRO’s revenue and reduced its profit or loss for the period

by €5 million.

The government measures based on the Covid-19 pandemic had a massively negative impact

on the sales and earnings development of the Aviludo Group.

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NOTES TO THE INCOME STATEMENT

1. Sales revenues

Revenue is recognised in accordance with IFRS 15 (Revenue from Contracts with Customers).

Revenue is allocated to the following categories:

€ million

Store-based and other business

METRO Germany

METRO Western Europe (excl. Germany)

METRO Russia

METRO Eastern Europe (excl. Russia)

METRO Asia

Others

Delivery sales

METRO Germany

METRO Western Europe (excl. Germany)

METRO Russia

METRO Eastern Europe (excl. Russia)

METRO Asia

Others

Total sales

METRO Germany

METRO Western Europe (excl. Germany)

METRO Russia

METRO Eastern Europe (excl. Russia)

METRO Asia

Others

2. Other operating income

€ million

Income from logistics services

Services

Rents incl. reimbursements of subsidiary rental costs

Services rendered to suppliers

Gains from the disposal of fixed assets and gains from the reversal of impairment
losses

Miscellaneous

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

2019/20

21,695

2020/21

20,602

4,166

8,032

2,412

6,047

1,023

3,937

533

1,570

232

1,078

516

4,041

7,626

2,080

5,876

935

4,164

416

1,758

295

1,129

561

25,632

24,765

4,699

9,603

2,644

7,125

1,539

4,457

9,384

2,374

7,004

1,496

2019/20

2020/21

281

244

169

173

948

342

171

150

114

281

1,107

N O T E S

N O T E S T O T H E I N C O M E S T A T E M E N T

176

The income from logistics services provided by METRO LOGISTICS is offset by expenses from

logistics services, which are reported under other operating expenses.

Services include income from advertising services provided by METRO ADVERTISING in the

amount of €87 million (2019/20: €157 million); corresponding expenses from advertising services

are shown under selling expenses.

The gains from the disposal of fixed assets and gains from the reversal of impairment losses

include income in the amount of €36 million from the disposal of real estate (2019/20:

€3 million). Of this amount, €17 million (2019/20: €0 million) relates to income from a sale and

leaseback transaction. Income from reversals of impairment losses amounts to €0 million (2019/

20: €1 million).

The other operating income includes cost allocations, income from the use of the METRO

brand and a great number of insignificant individual items.

3. Selling expenses

€ million

Personnel expenses

Cost of material

2019/20

2020/21

1,931

1,917

3,849

1,922

1,891

3,814

With regard to selling expenses, the decline in cost of material compared to the previous year

resulted in particular from reduced advertising costs and lower recruitment costs. The sale of

METRO’s IT companies led to a reduction in depreciation and amortisation at METRO DIGITAL,

but IT costs increased due to the agreements entered into with external service provider Wipro.

The country exits from Japan, Myanmar and Classic Fine Foods Philippines led to a rise in

impairment losses on property, plant and equipment compared with the previous year.

Supplemental disclosures about depreciation and impairment losses are provided in no. 15 –
Depreciation/amortisation/impairment losses

page 183 .

page 183

4. General administrative expenses

€ million

Personnel expenses

Cost of material

2019/20

2020/21

469

362

831

467

408

875

The increase in cost of material is primarily related to the amortisation of intangible assets and

higher consultancy costs.

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5. Other operating expenses

€ million

Expenses from logistics services

Impairment losses on goodwill

Losses from the disposal of fixed assets

Miscellaneous

2019/20

2020/21

266

321

334

440

The expenses from logistics services provided by METRO LOGISTICS are offset by income from

logistics services, which are reported under other operating income.

6. Earnings from impairment of financial assets

The result from impairment losses on financial assets amounts to €26 million (2019/20:

€64 million) and includes impairment losses on receivables from contracts with customers

amounting to €11 million (2019/20: €51 million). This includes expenses from additions to

impairment losses, income from the reversal of impairment losses, and income from the receipt

of cash and cash equivalents for financial assets that have already been derecognised.

7. Earnings share of operating/non-operating companies recognised at equity

The earnings of operating companies recognised at equity that have an operational relation to

the ordinary business activities are shown in the income statement in the EBIT item. It amounts

to €19 million (2019/20: €14 million). Of this, €10 million (2019/20: €6 million) is attributable to

the METRO Western Europe (excluding Germany) segment and €7 million (2019/20: €7 million)

to the Others segment as well as €3 million (2019/20: €1 million) to the METRO Asia segment.

8. Other investment result

Other investment results in the amount of €12 million (2019/20: €3 million) include the impact of

the fair value measurement of investments in the amount of €12 million (2019/20: €2 million).

Dividends from investments amounted to €0 million (2019/20: €0 million).

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9. Net interest income/interest expenses

The interest result can be broken down as follows:

€ million

Interest income

thereof from leases

thereof from post-employment benefits plans

thereof from financial instruments of the measurement categories according to
IFRS 9

Interest expenses

thereof from leases

thereof from post-employment benefits plans

thereof from financial instruments of the measurement categories according to
IFRS 9

Interest result

2019/20

2020/21

(15)

(5)

(8)

−252

(−177)

(−11)

(−56)

−220

(16)

(4)

(7)

−224

(−152)

(−10)

(−53)

−194

Interest income and interest expenses from financial instruments are assigned to the

measurement categories according to IFRS 9 on the basis of the underlying transactions.

The interest expenses included here (of the measurement categories in accordance with IFRS

9) primarily include interest expenses for issued bonds (including the EURO Commercial Paper

Programme) of €29 million (2019/20: €31 million) and for liabilities to banks of €16 million

(2019/20: €17 million).

The decline in interest expenses was primarily the result of lower interest expenses from

leases.

For more information about possible effects from currency risks, see no. 43 – management of financial risks
238 .

page

10. Other financial result

The other financial income and expenses from financial instruments are assigned to

measurement categories according to IFRS 9 on the basis of the underlying transactions.

Besides income and expenses from the measurement of financial instruments (except derivatives

in hedging relationships in accordance with IAS 39), this also includes the measurement of

foreign currency positions according to IAS 21.

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€ million

Other financial income

thereof currency effects

thereof hedging transactions

Other financial expenses

thereof currency effects

thereof hedging transactions

Other financial result

thereof from financial instruments of the measurement categories according to
IFRS 9

thereof cash flow hedges:

ineffectiveness

2019/20

2020/21

320

(255)

(49)

−392

(−325)

(−35)

−72

(16)

(−2)

193

(101)

(75)

−168

(−125)

(−18)

(25)

(3)

The total comprehensive income from currency effects and measurement results from hedging

transactions and hedging relationships totalled €32 million (2019/20: €−57 million). In addition,

the other financial result reflects €4 million (2019/20: €−13 million) in currency effects resulting

from the translation of the financial statements of foreign subsidiaries that are recognised

through profit or loss in the year the subsidiary is deconsolidated or in the year business

activities are discontinued. In addition, impairment losses on financial assets amounting to

€0 million (2019/20: €−2 million) were recognised in the reporting period.

For more information about possible effects from currency risks, see no. 43 – management of financial risks
238 .

page

11. Net results according to measurement categories

The key effects of income from financial instruments are as follows:

2019/20

€ million

Investments

Interest

Fair value
measurements

Currency

translations Disposals

Impairments Other

Net
result

Financial assets measured
at amortised cost, incl.
cash and cash equivalents

Financial assets at fair
value through profit or
loss

Equity instruments
measured outside of
profit or loss

Financial liabilities
measured at amortised
cost

−56

−48

−8

−3

−58

−46

−58

−4

−5

−53

−82

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2020/21

€ million

Investments

Interest

Fair value
measurements

Currency

translations Disposals

Impairments Other

Net
result

Financial assets
measured at amortised
cost, incl. cash and cash
equivalents

Financial assets at fair
value through profit or
loss

Equity instruments
measured outside of
profit or loss

Financial liabilities
measured at amortised
cost

−53

−46

−3

−15

−7

−21

−19

−28

−19

−5

−65

−25

The income and expenses from financial instruments are assigned to measurement categories

according to IFRS 9 on the basis of the underlying transactions.

Investment income and income effects from the disposal of investments are included in other

investment result. The income and expenses from interest are part of the interest result. Fair

value measurements and effects from other financial expenses and currency translation are

included in the other financial result. Income effects from the disposal of other financial liabilities

are included in earnings before interest and taxes (EBIT). The expenses from impairments are

included in the result from impairments on financial assets.

Additional information on the risks arising from impairments can be found in no. 43 – management of financial risks

page 238 .

Remaining financial income and expenses included in the other financial result primarily concern

bank commissions and similar expenses that are incurred within the context of financial assets

and liabilities.

12. Income taxes

Income taxes include the taxes on income paid or owed in the individual countries as well as

deferred taxes.

€ million

Deferred tax expense/income (+/−)

thereof from temporary differences

thereof from loss and interest carry-forwards

2019/20

2020/21

−25

(−22)

(−3)

−72

(−67)

(−5)

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€ million

Actual taxes

thereof Germany

thereof international

thereof tax expenses/income of current period

thereof tax expenses/income of previous periods

Deferred taxes

thereof Germany

thereof international

2019/20

2020/21

133

(10)

(123)

(143)

(−10)

−25

(24)

(−49)

108

157

(12)

(145)

(102)

(55)

−72

(3)

(−76)

The income tax rate of the German companies of METRO consists of a corporate income tax of

15.00% plus a 5.50% solidarity surcharge on corporate income tax as well as the trade tax of

14.70% given an average assessment rate of 420.00%. All in all, this results in an aggregate tax

rate of 30.53%. The tax rates are unchanged from the previous year. The income tax rates

applied to foreign companies are based on the respective laws and regulations of the individual

countries and vary within a range of 9.00% (2019/20: 0.00%) and 34.94% (2019/20: 34.94%).

The decrease of €23 million in the recognised income tax expenses is mainly attributable to

opposing effects between effective and deferred taxes in Austria (country exit Japan) and

Russia as well as to reversal effects of deferred tax liabilities in Germany.

Applying the German group tax rate to the reported pre-tax result would result in an income

tax expense of €12 million (2019/20: €−10 million). The deviation of €73 million (2019/20:

€118 million) from the reported tax expense of €85 million (2019/20: €108 million) can be

reconciled as follows:

€ million

EBT (earnings before taxes)

Expected income tax expenses (30.53%)

Effects of differing national tax rates

Tax expenses and income relating to other periods

Non-deductible business expenses for tax purposes

Effects of not recognised or impaired deferred taxes

Additions and reductions for local taxes

Tax holidays

Other deviations

Income tax expenses according to the income statement

2019/20

2020/21

−32

−10

−2

−10

−3

−2

108

−17

−11

−24

Group tax rate

−338.3%

212.6%

The item ‘effects of differing national tax rates’ includes a deferred tax expense of €3 million

(2019/20: €3 million) from tax rate changes.

The tax expenses and income relating to other periods include the offsetting effects between

effective and deferred taxes (Japan country exit).

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The reduction in non-deductible operating expenses is largely attributable to transfer pricing

agreements entered into with foreign tax authorities in connection with the recognition of the

group-wide transfer pricing system introduced in previous years.

The year-on-year increase in deferred taxes that are either not recognised or have been

written down is primarily due to losses related to the Japan country exit.

Tax holidays for the current year include effects from various tax-free divestments.

13. Profit or loss for the period attributable to non-controlling interests

Of profit or loss for the period attributable to non-controlling interests, profit shares accounted

for €11 million (2019/20: €13 million) and loss shares for €0 million (2019/20: €−2 million).

14. Earnings per share

Weighted number of no-par-value shares

Profit or loss for the period attributable to the shareholders of METRO AG (€ million)

Earnings per share in € (basic = diluted)

from continuing operations

from discontinued operations

2019/20

2020/21

363,097,253

460

1.27

(−0.40)

(1.67)

−56

−0.15

(−0.15)

(0.00)

Earnings per share are determined by dividing profit or loss for the period attributable to the

shareholders of METRO AG by the weighted number of no-par-value shares. There was no

dilution in the reporting period or the year before from so-called potential shares.

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15. Depreciation/ amortisation/ impairment losses

Depreciation/amortisation/impairment losses of €969 million (2019/20: €858 million) include

impairment losses totalling €172 million (2019/20: €55 million).

The impairment is mainly losses attributable to the METRO Germany segment (€101 million),

in particular the impairment of goodwill of €94 million. In addition, impairment losses of

€48 million were recognised in the METRO Asia segment due to the country exits from Japan,

Myanmar and Classic Fine Foods Philippines, as well as impairment losses of €8 million in the

METRO Russia segment, €7 million in the Others segment and €5 million in the METRO Western

Europe (excluding Germany) segment.

The attribution of depreciation/amortisation/impairment losses in the income statement and

the affected asset categories is as follows:

2019/20

€ million

Cost of sales

thereof depreciation/
amortisation

thereof impairment

Selling expenses

thereof depreciation/
amortisation

thereof impairment

General administrative expenses

thereof depreciation/
amortisation

thereof impairment

Other operating expenses

thereof impairment

Scheduled impairment losses and
impairment before impairment of
financial investments

Net financial result

thereof impairment

Scheduled
depreciation/amortisation/
impairment losses

thereof depreciation/
amortisation

thereof impairment

Other
intangible
assets

Property,
plant and
equipment

Goodwill

Usufructuary
rights

Investment
properties

Financial
assets1

Total

(77)

(0)

618

(595)

(22)

135

(131)

(4)

(27)

857

(1)

(0)

(1)

(0)

(27)

(0)

(2)

(0)

(24)

(0)

316

(50)

(0)

244

(34)

(305)

(240)

(0)

(92)

(4)

(0)

132

(0)

(11)

(18)

(0)

358

(0)

(4)

(21)

(0)

315

(0)

315

(311)

(4)

(0)

(17)

(7)

(1)

(0)

(18)

(7)

132

358

(0)

(27)

(128)

(4)

(346)

(11)

858

(0)

(1)

(803)

(55)

1 Also comprise investments accounted for using the equity method.

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2020/21

€ million

Cost of sales

thereof depreciation/
amortisation

thereof impairment

Selling expenses

thereof depreciation/
amortisation

thereof impairment

General administrative expenses

thereof depreciation/
amortisation

thereof impairment

Other operating expenses

Scheduled impairment losses and
impairment before impairment of
financial investments

Net financial result

thereof impairment

Scheduled
depreciation/amortisation/
impairment losses

thereof depreciation/
amortisation

thereof impairment

Other
intangible
assets

Property,
plant and
equipment

Goodwill

Usufructuary
rights

Investment
properties

Financial
assets1

(0)

(2)

(0)

(36)

(0)

116

(107)

(9)

(0)

154

(0)

(24)

(0)

340

(288)

(52)

(14)

(0)

379

(0)

(51)

(1)

232

(0)

(221)

(29)

(11)

(26)

(0)

310

(0)

(1)

(0)

Total

(76)

(2)

639

(574)

(65)

157

(148)

(10)

(95)

969

(0)

154

379

310

969

(0)

(95)

(145)

(9)

(325)

(53)

(297)

(13)

(30)

(2)

(0)

(798)

(172)

thereof impairment

(95)

1 Also comprise investments accounted for using the equity method.

Detailed explanations on the impairment test of goodwill can be found under No. 19 – Goodwill

page 186 .

16. Cost of materials

The cost of sales includes the following cost of materials:

€ million

Cost of raw materials, supplies and goods purchased

Cost of services purchased

2019/20

20,572

20,590

2020/21

19,851

19,868

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17. Personnel expenses

Personnel expenses can be broken down as follows:

€ million

Wages and salaries

Social security expenses, expenses for post-employment benefits and related
employee benefits

(thereof for post-employment benefits)

2019/20

2020/21

2,256

537

(37)

2,793

2,229

539

(42)

2,768

Wages and salaries include expenses relating to restructuring measures and severance payments

of €85 million (2019/20: €84 million). The variable remuneration rose from €66 million in

financial year 2019/20 to €119 million in financial year 2020/21. Wages and salaries also include

expenses for long-term remuneration components totalling €17 million (2019/20: €13 million).

Annual average number of group employees:

Number of employees by headcount

2019/20

2020/21

Blue collar/white collar

Apprentices/trainees

95,906

1,733

97,639

93,344

1,797

95,141

This includes an absolute number of 15,422 (2019/20: 16,160) part-time employees. The number

of employees working outside of Germany stood at 76,597 (2019/20: 78,199). This includes

75,660 blue- and white-collar employees (2019/20: 77,341). In addition, 937 (2019/20: 858)

trainees were trained abroad.

18. Other taxes

The other taxes (for example property tax, motor vehicle tax, excise tax and transaction tax)

have the following effects on the income statement:

€ million

Other taxes

thereof in cost of sales

thereof in selling expenses

thereof in general administrative expenses

2019/20

2020/21

(1)

(59)

(9)

(1)

(52)

(9)

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NOTES TO THE BALANCE SHEET

19. Goodwill

Goodwill amounts to €644 million (30/9/2020: €731 million).

At the closing date, the breakdown of goodwill among the major cash-generating units was

as shown below:

METRO Cash & Carry France

METRO Cash & Carry Poland

METRO Cash & Carry Italy

METRO Cash & Carry Romania

METRO Cash & Carry Spain

Pro à Pro

METRO Cash & Carry Russia

METRO Cash & Carry Czech Republic

METRO Cash & Carry Germany

Others

30/9/2020

30/9/2021

WACC

€ million

293

731

4.6

4.9

6.3

6.7

5.1

4.6

6.3

4.8

4.5

€ million

293

644

4.6

4.5

5.6

6.1

4.9

4.3

5.8

4.4

4.3

Goodwill is tested for impairment once a year. This is carried out at the level of a group of cash-

generating units. Specifically, this is usually the organisational unit per country. In line with the

internal management system, the goodwill of the previously jointly controlled cash-generating

unit METRO Cash & Carry Spain/Portugal was separated. Following impairment testing, the

goodwill was reallocated to the cash-generating units in accordance with their relative fair

values less sales costs. The previous year’s figure was adjusted to improve comparability.

In the impairment test, the cumulative carrying amount of the group of cash-generating units

is compared with the recoverable amount. The recoverable amount is defined as the value in use

or fair value less costs to sell, whichever is higher. It is calculated from discounted future cash

flows and the level 3 input parameters of the fair value hierarchy.

The description of the fair value hierarchies is included in no. 39 – carrying amounts and fair values according to
measurement categories

page 228 .

Expected future cash flows are based on a qualified planning process under consideration of

intra-group experience as well as macroeconomic data collected by third-party sources. The

detailed planning period generally spans 3 years, with various scenarios being derived with

regard to the effects of the Covid-19 pandemic and analysed with regard to their

appropriateness for the impairment test. The increased uncertainty about future developments

was taken into account by adjusting the sales and earnings planning to properly reflect the

crisis. The detailed planning period can generally be extended by up to 2 further planning years

for units undergoing a transformation process, but no use was made of this option in financial

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187

year 2020/21. Following the detailed planning period, a growth rate of 1% is assumed, as in the

previous year. The capitalisation rate as the weighted average cost of capital (WACC) is

determined using the capital asset pricing model. In the process, an individual peer group is

assumed for all groups of cash-generating units operating in the same business segment. In

addition, the capitalisation rates are determined on the basis of an assumed basic interest rate

of 0.3% (30/9/2020: 0.0%) and a market risk premium of 7.8% (30/9/2020: 7.8%) in Germany as

well as a beta factor of 0.80 (30/9/2020: 0.88). Country-specific risk premiums based on the

respective country rating are applied to the equity cost of capital and to the borrowing costs.

The capitalisation rates after taxes determined individually for each group of cash-generating

units range from 4.3% to 10.5% (30/9/2020: 4.5% to 10.7%).

The mandatory annual impairment testing of goodwill considered significant carried out by

METRO as of 30 June 2021 resulted in the following assumptions regarding the development of

sales, EBITDA and the EBITDA margin targeted for valuation purposes until the end of the

detailed planning period. In view of the easing of pandemic-related restrictions, we assume

significant sales and EBITDA growth for all companies in the detailed planning phase. Given the

limited comparability of financial year 2019/20 and 2020/21 in many countries, the following
table compares an annual average derived from the 3rd planning year with the pre-pandemic
level in financial year 2018/19 to estimate developments in the detailed planning period. We

expect to see further EBITDA margin recovery after the end of the detailed planning period.

METRO Cash & Carry France

METRO Cash & Carry Poland

METRO Cash & Carry Spain

Pro à Pro

METRO Cash & Carry Romania

METRO Cash & Carry Italy

Sales

EBITDA

EBITDA margin

Detailed
planning period
(years)

Slightly
increasing

Stable
development

Solidly rising

Moderately
regressing

Moderately
rising

Stable
development

Significantly
rising

Stable
development

Slightly
increasing

Stable
development

Slightly
regressing

Moderately
regressing

Slightly
regressing

Impairment losses on goodwill of €95 million were recognised in the financial year; they are

mainly attributable to METRO Cash & Carry Germany (2019/20: €27 million) due to expected

pandemic-related uncertainties in the hospitality market. Likewise, changes in the logistics chain,

an increased focus on availability of goods and further investment activities have consequences

for future cash flows. As of 30 June 2021, the mandatory annual impairment test also confirmed

the recoverability of all other capitalised goodwill. In addition to the impairment test, 2

sensitivity analyses were conducted for each group of cash-generating units. In the first

sensitivity analysis, the interest rate was raised by 10.0%. In the second sensitivity analysis, a

lump sum discount of 10.0% was applied to the assumed perpetual free cash flow. These

changes did not result in significant impairment for any of the groups of cash-generating units.

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The acquisition of the Aviludo Group resulted in goodwill addition of €7 million. Disposals of

goodwill arise due to changes in the consolidation group and are reported at the time of

deconsolidation.

€ million

Acquisition or production costs

As of 1/10/2019

Currency translation

Additions to consolidation group

Additions

Disposals

Transfers

As of 30/9/2020 and 1/10/2020

Currency translation

Additions to consolidation group

Additions

Disposals

Transfers

As of 30/9/2021

Depreciation

As of 1/10/2019

Currency translation

Additions, scheduled

Additions, impairment

Disposals

Reversals of impairment losses

Transfers

As of 30/9/2020 and 1/10/2020

Currency translation

Additions, scheduled

Additions, impairment

Disposals

Reversals of impairment losses

Transfers

As of 30/9/2021

Carrying amount as of 1/10/2019

Carrying amount as of 30/9/2020

Carrying amount as of 30/9/2021

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

Goodwill

829

−34

795

−16

−1

796

−7

−16

152

785

731

644

N O T E S

N O T E S T O T H E B A L A N C E S H E E T

189

20. Other intangible assets

€ million

Intangible assets without goodwill

(thereof internally generated
intangible assets)

Acquisition or production costs

As of 1/10/2019

Currency translation

Additions to consolidation group

Additions

Disposals

Reclassifications in accordance with IFRS 5

Transfers

As of 30/9/2020 and 1/10/2020

Currency translation

Additions to consolidation group

Additions

Disposals

Reclassifications in accordance with IFRS 5

Transfers

As of 30/9/2021

Depreciation

As of 1/10/2019

Currency translation

Additions, scheduled

Additions, impairment

Disposals

Reclassifications in accordance with IFRS 5

Reversals of impairment losses

Transfers

As of 30/9/2020 and 1/10/2020

Currency translation

Additions, scheduled

Additions, impairment

Disposals

Reclassifications in accordance with IFRS 5

Reversals of impairment losses

Transfers

As of 30/9/2021

Carrying amount as of 1/10/2019

Carrying amount as of 30/9/2020

Carrying amount as of 30/9/2021

1,967

−20

154

−35

2,069

138

−9

−15

2,199

1,405

−10

128

−34

1,493

145

−8

−12

1,631

562

576

568

(1,106)

(−2)

(0)

(122)

(−15)

(0)

(18)

(1,229)

(0)

(115)

(−1)

(0)

(−3)

(1,340)

(864)

(−2)

(69)

(4)

(−15)

(0)

(13)

(933)

(0)

(86)

(7)

(−2)

(0)

(−1)

(1,023)

(242)

(296)

(317)

The other intangible assets have both finite and indefinite expected useful lives. Intangible

assets with a finite expected useful life are subject to scheduled depreciation/amortisation.

Intangible assets with an indefinite expected useful life are subjected to annual impairment tests.

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

N O T E S

N O T E S T O T H E B A L A N C E S H E E T

190

Assets with an indefinite useful life relate to acquired brand rights. The carrying amount is

€101 million (30/9/2020: €95 million). The expected useful life of the trademark rights is

indeterminable, because METRO can use these rights without restrictions and abandoning them

is not envisaged in the future. The carrying amounts of the brands are reviewed annually for

units to which goodwill is not simultaneously allocated in line with the procedure for the

respective purchase price allocations using the licence price analogy method. Level 3 input

parameters of the fair value hierarchy are applied here. This involves applying licence rates of

between 0.2% and 1.0% and WACC of between 4.3% and 4.8%. The mandatory annual

impairment test confirmed the recoverability of the carrying amounts. In addition, sensitivity

analyses were carried out, assuming a 10% reduction in the sustainable expected sales of the

respective units or a 10% increase in WACC. Even in these scenarios, no impairment would have

resulted.

Additions in the amount of €138 million (2019/20: €154 million) concern internally generated

software at €115 million (2019/20: €122 million), software purchased from third parties and still in

development at €12 million (2019/20: €19 million), and concessions, rights and licences at

€11 million (2019/20: €13 million).

Research and development expenses recognised in expenses essentially concern internally

generated software and amounted to €43 million (2019/20: €30 million).

As in the previous year, there are no material restrictions on title or right to dispose of

intangible assets. Purchasing obligations for intangible assets amounting to €1 million

(30/9/2020: €1 million) were recorded.

21. Property, plant and equipment

Property, plant and equipment includes own tangible assets and rights of use for leased

property, plant and equipment.

€ million

Property, plant and equipment

Usufructuary rights

30/9/2020

30/9/2021

3,728

2,084

5,811

3,545

2,117

5,663

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

N O T E S

N O T E S T O T H E B A L A N C E S H E E T

191

The inventories and developments are each presented and explained separately below.

The development of own tangible assets is shown in the following table.

€ million

Acquisition or production costs

As of 1/10/2019

Currency translation

Additions to consolidation group

Additions

Disposals

Reclassifications in accordance with IFRS 5

Transfers

Other plant,
business and
office
equipment

Land and
buildings

Assets under
construction

5,951

−457

−26

−1

3,093

−136

−104

Total

9,160

−600

198

−142

−1

8,618

189

−114

−164

8,649

4,900

−252

346

−122

−1

4,890

325

−90

−134

5,104

4,260

3,728

3,545

116

−7

109

−13

−109

114

−7

−1

−111

−1

106

As of 30/9/2020 and 1/10/2020

5,531

2,991

Currency translation

Additions to consolidation group

Additions

Disposals

Reclassifications in accordance with IFRS 5

Transfers

As of 30/9/2021

Depreciation

As of 1/10/2019

Currency translation

Additions, scheduled

Additions, impairment

Disposals

Reclassifications in accordance with IFRS 5

Reversals of impairment losses

Transfers

−17

−4

5,659

2,711

−163

165

−22

−1

−90

−159

2,897

2,179

−87

181

−100

As of 30/9/2020 and 1/10/2020

2,703

2,177

Currency translation

Additions, scheduled

Additions, impairment

Disposals

Reclassifications in accordance with IFRS 5

Reversals of impairment losses

Transfers

As of 30/9/2021

Carrying amount as of 1/10/2019

Carrying amount as of 30/9/2020

Carrying amount as of 30/9/2021

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

165

−3

2,931

3,240

2,828

2,728

161

−86

−130

−1

2,163

914

814

734

N O T E S

N O T E S T O T H E B A L A N C E S H E E T

192

The decline of €182 million in property, plant and equipment is largely due to investments being

more than offset by current depreciation. In addition, disposals related to the sale of METRO’s IT

companies reduced property, plant and equipment by €30 million.

Restrictions on titles in the form of liens and encumbrances for items of property, plant and

equipment amounted to €9 million (30/9/2020: €10 million).

Contractual commitments were recorded for items of property, plant and equipment in the

amount of €40 million (30/9/2020: €22 million).

The development of rights of use of leased property, plant and equipment is shown in the

following table.

€ million

Net carrying amount

As of 1/10/2019

Additions

Depreciation

Impairment

Reclassifications and net change
in consolidation group

Disposals, currency translation and reversals
of impairment losses

As of 30/9/2020 and 1/10/2020

Additions

Depreciation

Impairment

Reclassifications and net change in consolidation
group

Disposals, currency translation and reversals
of impairment losses

As of 30/9/2021

Land and
buildings

Vehicles

Others

Total

2,248

185

−254

−4

−63

−165

1,947

315

−241

−11

−31

1,988

−45

−9

103

−46

−1

−7

101

−12

−2

−4

−11

−1

−5

−2

2,374

267

−311

−4

−65

−178

2,084

377

−297

−13

−40

2,117

The €33 million increase in usufructuary rights is largely due to investments of €377 million in

usufructuary rights. These mainly relate to contract extensions for large market portfolios as well

as rental indexing. Depreciation and amortisation of €297 million and disposals of €43 million

had an offsetting effect. In addition, usufructuary rights were reduced by €9 million in

connection with the disposal of METRO’s IT companies.

Impairment disclosures are provided in no. 15 – Depreciation/amortisation/impairment losses

page 183 .

A detailed explanation of the disposal of METRO’s IT companies can be found in no. 42 – assets held for sale and
liabilities

page 236 .

Information on leases is provided in no. 46 – leases

page 245 .

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

N O T E S

N O T E S T O T H E B A L A N C E S H E E T

193

22. Investment properties

Investment properties are recognised at depreciated cost. As of 30 September 2021, a total of

€170 million (30/9/2020: €188 million) was recognised in the balance sheet. The development of

these real estates is shown in the following table.

Investment
properties
(owned)

Investment
property rights
of use

Total

248

−40

−8

200

−10

−1

−10

180

168

−26

−8

140

−6

−19

118

500

−16

−4

282

768

−7

−1

771

453

−15

−2

187

641

−7

663

127

109

748

−56

−4

274

969

−17

−2

−10

951

621

−41

−2

178

781

−13

−19

781

127

188

170

€ million

Acquisition or production costs

As of 1/10/2019

Currency translation

Additions to consolidation group

Additions

Disposals

Transfers associated with the tangible assets

As of 30/9/2020 and 1/10/2020

Currency translation

Additions to consolidation group

Additions

Disposals

Transfers associated with the tangible assets

As of 30/9/2021

Depreciation

As of 1/10/2019

Currency translation

Additions, scheduled

Additions, impairment

Disposals

Reversals of impairment losses

Transfers associated with the tangible assets

As of 30/9/2020 and 1/10/2020

Currency translation

Additions, scheduled

Additions, impairment

Disposals

Reversals of impairment losses

Transfers associated with the tangible assets

As of 30/9/2021

Carrying amount as of 1/10/2019

Carrying amount as of 30/9/2020

Carrying amount as of 30/9/2021

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

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194

The fair values of these investment properties total €311 million (30/9/2020: €362 million) with a

carrying amount of €170 million (30/9/2020: €188 million). They are determined on the basis of

internationally recognised measurement methods, particularly the comparable valuation method

and the discounted cash flow method (level 3 of the 3-level valuation hierarchy of IFRS 13 (Fair

Value Measurement)). This measurement is based on a detailed planning period of 10 years.

Aside from market rents, market-based discount rates were used as key valuation parameters.

The discount rates are determined on the basis of analyses of relevant real estate markets as

well as evaluations of comparable transactions and market publications issued by international

consulting firms. The resulting discount rates reflect the respective country and location risk as

well as the property-specific real estate risk. In addition, project developments are considered to

determine the best use.

The fair value is usually assessed by METRO PROPERTIES employees. Where deemed

appropriate and necessary, external expert appraisals are also gathered.

Rental income from continuing operations amounts to €84 million, with usufructuary rights

accounting for €80 million of this total (2019/20: €87 million, thereof €70 million from

usufructuary rights). The related expenses amount to €68 million, with usufructuary rights

accounting for €64 million (2019/20: €60 million, thereof €51 million from usufructuary rights).

Restrictions on titles in the form of liens and encumbrances amounted to €0 million

(30/9/2020: €0 million). As in the previous year, no contractual commitments for the acquisition

of investment properties were made.

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

N O T E S

N O T E S T O T H E B A L A N C E S H E E T

195

23. Financial investments and investments accounted for using the equity
method

The development of financial assets is shown in the following table.

€ million

Loans

Investments

Securities

Total financial
assets

Acquisition or production costs

As of 1/10/2019

Currency translation

Additions to consolidation group

Additions1

Disposals1

Reclassifications in accordance with IFRS 5

Transfers

As of 30/9/2020 and 1/10/2020

Currency translation

Additions to consolidation group

Additions1

Disposals1

Reclassifications in accordance with IFRS 5

Transfers

As of 30/9/2021

Depreciation

As of 1/10/2019

Currency translation

Additions, scheduled

Additions, impairment

Disposals

Reclassifications in accordance with IFRS 5

Reversals of impairment losses

Transfers

As of 30/9/2020 and 1/10/2020

Currency translation

Additions, scheduled

Additions, impairment

Disposals

Reclassifications in accordance with IFRS 5

Reversals of impairment losses

Transfers

As of 30/9/2021

Carrying amount as of 1/10/2019

Carrying amount as of 30/9/2020

Carrying amount as of 30/9/2021

−2

−1

−6

−23

102

−2

−9

104

−25

−1

1 The measurement effects of equity investments carried at fair value are also shown here under additions and disposals, since they do not involve depreciations in the

narrower sense.

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

N O T E S

N O T E S T O T H E B A L A N C E S H E E T

196

The disclosures below provide information on investments accounted for using the equity

method.

As of 30 September 2021, shares in investments accounted for using the equity method

amounted to €361 million (30/9/2020: €421 million). Disclosures on the major investments

accounted for using the equity method can be found in the following table.

Apart from Habib METRO Pakistan (closing date 30 June), all companies mentioned above

have 31 December as the closing date. The companies are included in the consolidated financial

statements of METRO AG with their latest available financial statements.

€ million

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

2019/20

2020/21

Habib METRO
Pakistan

OPCI FWP

OPCI FWS

Mayfair-group1

Disclosures on the
income statement

Sales revenues

Tax profit for the period from
continuing operations

Tax profit for the period from
discontinued operations

Other comprehensive income

Total comprehensive income

Dividend payments to the group

Disclosures on the balance sheet

Non-current assets

Current assets

Non-current liabilities

Current liabilities

Net assets

Amount of the share (in %)

Share of the group in the
net assets

Adjustment of asset values

Carrying amount of the share in
the group

–

271

107

172

–

267

102

168

–

251

254

179

161

–

166

–

179

–

1 The Mayfair group comprises 10 real estate companies, which were sold on 15 January 2021.

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

N O T E S

N O T E S T O T H E B A L A N C E S H E E T

197

€ million

2019/202

2020/213

2019/20

2020/21

2019/20

2020/21

WM Holding (HK)
Limited

Miscellaneous

Total

Disclosures on the income statement

Sales revenues

Tax profit for the period from continuing
operations

Tax profit for the period from
discontinued operations

Other comprehensive income

Total comprehensive income

Dividend payments to the group

Disclosures on the balance sheet

Non-current assets

Current assets

Non-current liabilities

Current liabilities

Net assets

Amount of the share (in %)

Share of the group in the net assets

Adjustment of asset values

Carrying amount of the share in the
group

–

250

1,861

146

177

207

2,085

–

−45

−37

–

2,534

872

1,315

804

1,287

258

–

258

–

111

–

111

–

114

–

−45

–

421

361

2 METRO acquired the stake in WM Holding (HK) Limited upon closing of the METRO China disposal transaction on 23 April 2020. The data to be disclosed for the equity

investment require a short financial statement of WM Holding (HK) Limited, including initial consolidation and the effects of purchase price allocation. The financial
statements of the acquiring party were in the process of being prepared.

3 The disclosures in the current year regarding the shares in WM Holding (HK) Limited are based on preliminary financial statements for a short financial year to

31 December 2020.

The other comprehensive income is the result of the currency translation outside of profit or loss

in the consolidated financial statements of WM Holding (HK) Limited.

METRO’s representation on the supervisory board of OPCI FRENCH WHOLESALE

PROPERTIES – FWP means that significant influence is maintained and equity accounting is

appropriate, although the investment only amounts to 5%.

The investments accounted for using the equity method within the group are mainly associate

companies and rental companies. The main purpose of the leasing companies is to acquire, lease

out and manage assets. The assets of these real estate companies are mainly leased by METRO

companies.

The investments in the Mayfair group were sold at the beginning of the current financial year.

A detailed description of the disposal of the investments in the Mayfair group can be found in no. 42 – Assets held
for sale and liabilities

page 236 .

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

N O T E S

N O T E S T O T H E B A L A N C E S H E E T

198

24. Other financial and other non-financial assets

30/9/2020

30/9/2021

Remaining term

€ million

Total

up to 1 year

over 1 year

Total

up to
1 year

over 1 year

Receivables due from suppliers

Miscellaneous financial assets

thereof leasing receivables

Other financial assets

Other tax receivables

Prepaid expenses and deferred charges

Miscellaneous non-financial assets

Other non-financial assets

243

466

(213)

709

261

394

243

282

(42)

525

261

377

184

(171)

185

232

415

(178)

647

177

301

231

274

(47)

505

177

281

142

(131)

142

Receivables due from suppliers comprise both invoiced receivables and deferred income for

subsequent supplier compensation (for example bonuses, advertising subsidies) and creditors

with debit balances.

The miscellaneous financial assets primarily consist of receivables from financing lease

agreements, receivables from credit card transactions, receivables from other financial

transactions and receivables and other assets from the real estate sector.

The other tax receivables include value added tax refunds, later offsettable input tax and

miscellaneous tax receivables. Value added tax refund claims, particularly in respect of the

Russian tax authorities, have declined significantly, as have value added tax liabilities.

Prepaid expenses and deferred charges include deferred charges and deferred rental, leasing

and interest charges as well as miscellaneous prepaid expenses.

Miscellaneous non-financial assets mainly consist of prepayments on inventories and other

non-current assets, as well as raw materials and supplies. In addition, they include contract

assets in the amount of €1 million (30/9/2020: €1 million) as well as assets for the right to

recover products from a customer on settling the refund liabilities in the amount of €1 million

(30/9/2020: €1 million).

25. Deferred tax assets/deferred tax liabilities

Deferred tax assets on tax loss carry-forwards and temporary differences amount to

€1,257 million before offsetting (30/9/2020: €1,249 million), an increase of €8 million compared

with 30 September 2020. The carrying amounts of deferred tax liabilities decreased by

€62 million to €995 million compared with the previous year (30/9/2020: €1,057 million).

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

N O T E S

N O T E S T O T H E B A L A N C E S H E E T

199

Deferred taxes relate to the following balance sheet items:

€ million

Goodwill

Other intangible assets

Property, plant and equipment and
investment properties

Financial investments and investments
accounted for using the equity method

Inventories

Other financial and non-financial assets

Assets held for sale

Provisions for post-employment benefits
plans and similar obligations

Other provisions

Financial liabilities

Other financial and non-financial liabilities

Liabilities related to assets held for sale

Outside basis differences

Write-downs of temporary differences

Loss carry-forwards

Carrying amount of deferred taxes
before offsetting

Offsetting

Carrying amount of deferred taxes

30/9/20201

30/9/2021

Change through profit or
loss

Assets

Liabilities

Assets

Liabilities

Assets

Liabilities

127

763

124

−76

117

699

112

747

−91

1,249

−991

258

1,057

−991

1,257

−911

345

123

703

995

−911

−4

−29

−10

−3

−15

−28

−16

−9

−6

−1

−13

−24

−8

−63

−9

−72

1 Previous year’s comparative values were adjusted due to a change in the accounting method (inventories); see the notes section ‘Change in accounting method

(inventories)’.

Of the reported balance of deferred tax assets and liabilities, €51 million (30/9/2020:

€53 million) is attributable to the group of incorporated companies of METRO AG. The

additional surplus of €211 million (30/9/2020: €139 million) is largely attributable to temporary

differences at various foreign subsidiaries. Based on business planning, realisation of these tax

assets is to be considered sufficiently likely.

In accordance with IAS 12 (Income Taxes), deferred tax liabilities relating to differences

between the carrying amount of a subsidiary’s pro rata equity in the balance sheet and the

carrying amount of the investment for this subsidiary in the parent company’s tax statement

must be recognised (so-called outside basis differences) if the tax benefit is likely to be realised

in the future. The differences can primarily be attributed to retained earnings of subsidiaries in

Germany and abroad. No deferred taxes were recognised for these retained earnings as they will

be reinvested over an indefinite period of time or are not subject to relevant taxation. Any

dividends paid by subsidiaries would be subject to dividend tax. In addition, foreign dividends

may trigger a withholding tax. As of 30 September 2021, no deferred tax liabilities were

recognised for planned dividend payments (30/9/2020: €8 million). The sum of the amount of

temporary differences in connection with investments in subsidiaries for which no deferred tax

liabilities were recognised was not determined as this would have been disproportionately

expensive due to the level of detail of the METRO group.

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

N O T E S

N O T E S T O T H E B A L A N C E S H E E T

200

The outside basis difference recognised in the reporting period relates to the country exit

from Japan.

No deferred tax assets were capitalised for the following tax loss carry-forwards and interest

carry-forwards or temporary differences because realisation of the assets in the short to medium

term is not expected:

€ million

Corporate tax losses

Trade tax losses

Interest carry-forwards

Temporary differences

30/9/2020

30/9/2021

4,686

3,752

288

4,802

3,742

114

331

The loss carry-forwards as of the closing date predominantly concern the German consolidation

group. They can be carried forward without limitation.

TAX EFFECTS ON COMPONENTS OF OTHER COMPREHENSIVE INCOME

€ million

Currency translation differences from
translating the financial statements of
foreign operations

thereof currency translation
differences from net investments in
foreign operations

Effective portion of gains/losses from
cash flow hedges

Effects from the fair value measurements
of equity instruments

Effects from the fair value measurements
of debt instruments

Subsequent measurement of associates/
joint ventures accounted for using the
equity method

Remeasurement of defined benefit
pension plans

Remaining income tax on other
comprehensive income

2019/20

2020/21

Before
taxes

Taxes After taxes

Before
taxes

Taxes After taxes

−468

111

(−72)

(0)

(−72)

(12)

−2

−463

−2

−1

−466

−9

−2

103

(0)

−1

(12)

−9

107

Deferred taxes on components of other comprehensive income primarily apply to the

remeasurement of defined benefit pension plans. The other components are not tax-effective.

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

N O T E S

N O T E S T O T H E B A L A N C E S H E E T

201

26. Inventories

€ million

Food merchandise

Non-food merchandise

30/9/20201

30/9/2021

1,380

480

1,860

1,490

474

1,964

1 Previous year’s comparative values were adjusted due to a change in the accounting method (inventories); see the notes section ‘Change in accounting method

(inventories)’.

Inventories increased from €1,860 million by €105 million to €1,964 million.

Positive currency effects, resulting in particular from the development of the Russian rouble,

increased inventories by a total of €16 million.

Inventories include impairments of €107 million (30/9/2020: €92 million). The inventories are

subject to the customary or statutory retention of title.

27. Trade receivables

Trade receivables increased by €66 million from €429 million to €496 million. These are

receivables with a remaining term of up to 1 year.

There were no significant currency effects on trade receivables. Trade receivables were also

reduced by the €1 million year-on-year impairment increase.

28. Impairments of financial assets

As of 30 September 2021, impairment losses recognised in the balance sheet in accordance with

IFRS 9 amounted to €164 million (30/9/2020: €160 million).

The following explanations relate to significant financial assets to which the impairment

requirements of IFRS 9 are applied.

For trade receivables, METRO makes use of the simplified procedure to determine expected

credit losses provided for in IFRS 9. METRO records the expected credit losses over the entire

term of the financial instruments on the basis of a provision matrix. Trade receivables are

combined in different portfolios with similar credit risk characteristics for this purpose. This is

based on the regions used for METRO’s segment reporting.

The loss default rates per maturity band of these portfolios are estimated on the basis of

previous experience with credit losses from such financial assets. The loss default rates

determined in this way are adjusted by including a projected index based on macroeconomic

developments.

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

N O T E S

N O T E S T O T H E B A L A N C E S H E E T

202

The table below shows the expected credit losses on trade receivables for each maturity

band as of the closing date, calculated on the basis of the provision matrix:

€ million

Gross carrying amount

Bandwidth of calculated
default rates

Risk provision as of 30/9/
2020

€ million

Gross carrying amount

Bandwidth of calculated
default rates

Risk provision as of 30/9/
2021

Total

387

thereof not
past due

thereof up
to 90 days
past due

thereof 91 to
180 days
past due

thereof 181
to 270 days
past due

thereof 271
to 360 days
past due

thereof
more than
360 days
past due

315

0.21% to
1.15%

0.79% to
6.27%

3.27% to
19.17%

5.90% to
23.09%

10.00% to
31.25%

13.75% to
81.25%

Total

432

thereof not
past due

thereof up
to 90 days
past due

thereof 91
to 180 days
past due

thereof 181
to 270 days
past due

thereof 271
to 360 days
past due

thereof
more than
360 days
past due

354

0.11% to
1.32%

0.50% to
6.55%

2.38% to
20.84%

3.92% to
25.57%

9.69% to
32.62%

13.65% to
81.25%

Besides the impairment recognised based on the presented regional provision matrix, the risk

provision of €25 million (30/9/2020: €21 million) also includes an additional country and

customer group-specific risk provision against the background of the Covid-19 pandemic.

Impairment on trade receivables is reconciled according to the simplified calculation as

follows:

€ million

As of 1/10/2019

Addition to impairment through profit or loss

Reversal of impairment through profit or loss

Utilisation

Currency effects

Other changes

As of 30/9/2020 and 1/10/2020

Addition to impairment through profit or loss

Reversal of impairment through profit or loss

Utilisation

Currency effects

Other changes

As of 30/9/2021

M E T R O A N N U A L R E P O R T 2 0 2 0 / 2 1

Trade receivables

−9

−8

−2

−19

−12

N O T E S

N O T E S T O T H E B A L A N C E S H E E T

203

The impairment as of 30 September 2021 amounted to €90 million (30/9/2020: €89 million) and

include impairments of €64 million (30/9/2020: €68 million) on individual receivables for which

there are objective indications of an impairment of creditworthiness.

The following table shows the gross carrying amounts of trade receivables that were or were

not past due as of the closing date, which were depreciated either on the basis of the respective

applied provision matrix or on the basis of objective indications of default:

€ million

Not past-due

Up to 90 days past-due

91 to 180 days past-due

181 to 270 days past-due

271 to 360 days past-due

More than 360 days past-due

Gross carrying amount

Impairment

Maximum credit risk as of 30/9/2020

€ million

Not past due

Up to 90 days past-due

91 to 180 days past-due

181 to 270 days past-due

271 to 360 days past-due

More than 360 days past-due

Gross carrying amount

Impairment

Maximum credit risk as of 30/9/2021

Trade receivables

364

509

−89

421

Trade receivables

427

571

−90

481

In addition, there is collateral of €15 million (30/9/2020: €8 million) for trade receivables. These

receivables were not impaired.

METRO applies the general impairment requirements of IFRS 9 to receivables from suppliers,

credit card transactions, loans and leases. A possible credit risk in these cases is determined on

the basis of the counterparty’s creditworthiness. For this purpose, METRO uses external ratings

of well-known rating agencies as well as internal credit risk rating grades based on the risk of

default of the respective financial instrument. The creditworthiness of the counterparties is

continuously monitored so that METRO recognises a significant increase in the credit risk and

can react promptly to any changes.

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The following table shows the development of risk provisions in relation to financial assets to

which the general impairment requirements of IFRS 9 are applied:

€ million

As of 1/10/2019

Newly originated/acquired financial assets

Other changes within one stage

Transfer to stage 1

Transfer to stage 2

Transfer to stage 3

Derecognised financial assets

Utilisation

Other changes2

As of 30/9/2020 and 1/10/2020

Newly originated/acquired financial assets

Other changes within one stage

Transfer to stage 1

Transfer to stage 2

Transfer to stage 3

Derecognised financial assets

Utilisation

Other changes2

As of 30/9/2021

No significantly
increased
credit risk
since
recognition
(stage 1)

Increased
credit risk
(stage 2)

Impaired
credit-
worthiness
(stage 3)

Total

341

−3

−2

521

−8

−5

−3

−2

−8

−5

1 Adjustment due to the application of the general impairment requirements to lease receivables.
2 Currency translation differences, changes in the consolidation group and reclassifications to assets held for sale are recognised in other changes.

Risk provisions as of 30 September 2021 amount to €56 million (30/9/2020: €53 million).

Stage 1 of the model contains financial assets that have a low credit risk or whose credit risk

has not increased significantly since the initial recognition of the asset. At this stage, the risk

provision is calculated as the 12-month expected credit loss. If the credit risk on the closing date

is significantly higher than at the time of initial recognition, the financial asset is reclassified to

stage 2. The amount of the risk provision is determined at this level as the expected losses that

can arise from all possible default events over the expected entire term of the financial

instrument. If there is objective evidence that a financial asset will not be collected in whole or in

part, it is reclassified to stage 3. Default is defined as the failure to maintain contractually agreed

cash flows.

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The table below shows the gross carrying amounts for those financial instruments for which

the impairment losses are determined according to the general approach; they are differentiated

according to the external rating of the counterparties:

€ million

AAA, AA+, AA, AA−

A+, A, A−

BBB+, BBB, BBB−

BB+, BB, BB−

B+ or lower

Gross carrying amount

Impairment

Maximum credit risk as of 30/9/2020

€ million

AAA, AA+, AA, AA−

A+, A, A−

BBB+, BBB, BBB−

BB+, BB, BB−

B+ or lower

Gross carrying amount

Impairment

Maximum credit risk as of 30/9/2021

No significantly
increased
credit risk
since
recognition
(stage 1)

Increased
credit risk
(stage 2)

Impaired
credit-
worthiness
(stage 3)

126

−9

No significantly
increased
credit risk
since
recognition
(stage 1)

Increased
credit risk
(stage 2)

Impaired
credit-
worthiness
(stage 3)

117

−1

116

−15

Total

124

188

−9

179

Total

166

−16

151

METRO minimises credit risk by exclusively investing in first-class debt instruments from

counterparties with a good to very good external rating (investment grade). Therefore, a

significant portion of the financial assets is allocated to stage 1 of the impairment model.

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For counterparties that do not have an external rating and are therefore assigned to the

internal risk classes, the credit risk determined according to the general approach is as follows:

No significantly
increased
credit risk
since
recognition
(stage 1)

Increased
credit risk
(stage 2)

Impaired
credit-
worthiness
(stage 3)

314

339

−1

338

−44

No significantly
increased
credit risk
since
recognition
(stage 1)

Increased
credit risk
(stage 2)

Impaired
credit-
worthiness
(stage 3)

320

344

−3

341

−37

Total

325

407

−44

362

Total

326

398

−40

357

€ million

Internal risk class 1 (not past due or up to 30 days
past-due)

Internal risk class 2 (31 to 90 days past due)

Internal risk class 3 (more than 90 days past due)

Gross carrying amount

Impairment

Maximum credit risk as of 30/9/2020

€ million

Internal risk class 1 (not past due or up to 30 days
past-due)

Internal risk class 2 (31 to 90 days past-due)

Internal risk class 3 (more than 90 days past-due)

Gross carrying amount

Impairment

Maximum credit risk as of 30/9/2021

29. Cash and cash equivalents

€ million

Cheques and cash on hand

Bank deposits and other financial assets with short-term liquidity

30/9/2020

30/9/2021

1,505

1,525

1,450

1,474

There were no restrictions on title in relation to cash and cash equivalents in the previous or in

the current reporting period.

For more information, see the cash flow statement

page 144 and no. 40 – notes to the cash flow statement

page 233 .

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30. Equity

The subscribed capital of METRO AG amounts to €363,097,253. It is divided as follows:

No-par-value bearer shares, accounting par value of €1.00

30/9/2020

30/9/2021

Ordinary shares

Number of shares

360,121,736

€

360,121,736

Preference shares

Number of shares

2,975,517

Total shares

Total share capital

€

2,975,517

Number of shares

363,097,253

€

363,097,253

As of 30 September 2021 and as of 30 September 2020, the subscribed capital of METRO AG

amounted to €363,097,253. It is divided into a total of 360,121,736 ordinary no-par-value bearer

shares (pro rata value of the share capital: €360,121,736, approximately 99.18%), as well as

2,975,517 preference no-par-value bearer shares (pro rata value of the share capital: €2,975,517,

approximately 0.82%). Each no-par-value share in the company has a notional interest of €1.00

in the share capital.

Each ordinary share entitles to a single vote in the company’s Annual General Meeting. The