General Accounting Principles of the Combined Financial Statements
Based on the master agreement dated 22 February 2017, the formation of a joint venture, REWE Dortmund SE & Co. KG, Dortmund, intensified the cooperation with REWE DORTMUND Großhandel eG, Dortmund. In return for 80.0 per cent of shares in the new company, REWE DORTMUND Großhandel eG transferred the entirety of its food wholesale operating business to the new company; and in return for 20.0 per cent of shares in the new company, REWE Deutscher Supermarkt AG & Co. KGaA, Cologne (hereinafter "KGaA"), transferred its shares in akzenta GmbH & Co. KG, Wuppertal, and akzenta Verwaltungs GmbH, Wuppertal, to the new company. The general partner of REWE Dortmund SE & Co. KG is the previously formed REWE Dortmund Verwaltungs SE, Dortmund, in which the KGaA holds a 20.0 per cent interest and REWE DORTMUND Großhandel eG holds 80.0 per cent of shares.
In addition, REWE DORTMUND Großhandel eG also contributed REWE DORTMUND Vertriebsgesellschaft mbH, Dortmund, including its wholly owned subsidiary Akzenta AK Diskont Markt GmbH, Dortmund. In turn, shares in 29 partnerships were contributed via AK Diskont Beteiligungs-GmbH and Rema Beteiligungs-GmbH, both of Dortmund; these partnerships are not consolidated due to materiality.
The KGaA controls REWE Dortmund SE & Co. KG by virtue of holding a majority of voting rights in the relevant corporate boards.
The merger is intended to render it possible to better realise synergies and increase competitiveness.
The value of the customer base which was recognised in the course of the acquisition was determined using the residual value method, for which the most significant variable was the value of the expected length of the company's relationship with customers. The useful life was derived using a statistical analytical process based on historical data.
The acquisition date was 31 August 2017. The 23.5 million euro cost was equivalent to the 80.0 per cent share contributed by the KGaA based on the enterprise value of the two akzenta companies. The merger resulted in 1.6 million euros in goodwill.
|in million €||REWE Dortmund|
|Property, plant and equipment||221.1|
|Other financial assets||77.8|
|Cash and cash equivalents||0.5|
|Deferred tax assets||86.4|
|Other financial liabilities||169.4|
|Deferred tax liabilities||78.3|
|Fair value of net assets||109.5|
In connection with the first-time inclusion of REWE Dortmund SE & Co. KG, costs of 1.1 million euros were recognised in profit or loss under other operating expenses.
Before taking into account consolidation measures and excluding the akzenta companies, REWE Dortmund SE & Co. KG has contributed to an increase of 729.4 million euros in revenue and to an increase of 10.9 million euros in combined earnings since the date of initial consolidation.
The disclosures in accordance with IFRS 3.B64 q) ii) are non-applicable, since REWE Dortmund SE & Co. KG has existed only since the date of first-time consolidation.
Pursuant to the purchase agreement dated 8 December 2016, the acquisition of 64 Kaiser's Tengelmann Group store locations by REWE Markt GmbH, Cologne, has entered into legal force. The stores were transferred in several stages from 2 January to 1 April 2017. This acquisition took the form of an asset deal. In addition, K-LOG Kaiser's Tengelmann Logistik- und Dienstleistungsgesellschaft mbH, Berlin (now operating under the name REWE Berlin Logistik GmbH, Berlin), was also acquired.
The acquisition date was 31 March 2017. The cost paid was 37.5 million euros.
|in million €||Kaiser's Tengelmann|
|Property, plant and equipment||20.7|
|Other financial assets||0.3|
|Cash and cash equivalents||0.5|
|Deferred tax assets||17.9|
|Other financial liabilities||7.4|
|Deferred tax liabilities||2.0|
|Fair value of net assets||-22.8|
The overall acquisition also involved the acquisition of a meat processing facility. Wilhelm Brandenburg GmbH & Co. oHG, Cologne, will continue to operate this facility for the time being pursuant to the operating agreement. The acquisition will be completed at a later date.
Immaterial ancillary acquisition costs were incurred in the course of the transaction, and are recognised under other operating expenses.
Pursuant to the assignment agreement dated 26 September 2017, Penny Market GmbH, Wiener Neudorf, Austria, acquired seven grocery stores in Italy's Liguria region from DICO S.P.A, Rome, Italy. This acquisition took the form of an asset deal.
The cost paid for the stores was 9.2 million euros. The transfer of these stores involved the transfer of property, plant and equipment (0.7 million euros) and other liabilities (0.3 million euros). The acquisition resulted in 8.8 million euros in goodwill, which primarily reflected the value of advantageous locations.
In connection with this acquisition, acquisition-related costs of 0.3 million euros were reported in the income statement under other operating expenses.
All assumed receivables do not include any receivables that are expected to be uncollectible.
All goodwill is partially tax-deductible.
In the previous year, REWE Markt GmbH, Cologne, initially acquired 55.0 per cent of shares in Supermärkte Nord Verwaltungs GmbH, Supermärkte Nord Vertriebs GmbH & Co. KG and coop Logistik GmbH, each with its registered office in Kiel, as at 31 December 2016. The preliminary cost was 140.6 million euros. The acquisition resulted in 167.0 million euros in goodwill.
The final determination of the cost and REWE Markt GmbH's percentage shareholding in the Supermärkte Nord companies took place during the financial year. The shareholding amounts to 73.92 per cent; cost amounting to 187.8 million euros was paid. This resulted retrospectively in 186.3 million euros in goodwill.
Based on the purchase agreement dated 20 September 2017, OOO BILLA Realty, Moscow, Russia, acquired six stores in Russia. The acquisition took the form of an asset deal which does not meet the requirements of IFRS 3. The cost was 6.3 million euros. The acquisition resulted primarily in additions to intangible assets amounting to 5.5 million euros, operating and office equipment amounting to 0.4 million euros and liabilities amounting to 0.4 million euros.
In March 2018, DER Touristik Group GmbH, Cologne, acquired all shares in Travel Lab SAS, Saint-Ouen, France; see also note 43 "Events After the Balance Sheet Date". The cost paid will be conclusively determined after purchase price allocation. Due to incomplete accounting, no further disclosures in accordance with IFRS 3 can be made.