General Accounting Principles of the Combined Financial Statements

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1. Basic Principles

These financial statements are a summary of the consolidated financial statements of REWE-ZENTRALFINANZ eG, Cologne (hereinafter referred to as "RZF" for short), and REWE - Zentral-Aktiengesellschaft, Cologne (hereinafter referred to as "RZAG" for short), for the financial year ended on 31 December 2017, and were prepared voluntarily (Combined Financial Statements). The consolidated financial statements of the companies identified above were prepared in accordance with International Financial Reporting Standards, as applicable in the European Union (hereinafter referred to as "IFRSs" for short), the supplemental provisions of the German Commercial Code (Handelsgesetzbuch, "HGB"), as well as the supplemental provisions of the articles of association of RZAG and RZF, and were audited by PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, Cologne. The Combined Financial Statements were also combined following IFRSs and were subject to the premise that the two companies are considered to be joint parent companies of their consolidated subsidiaries.

The Combined Financial Statements fully comply with all IFRSs as applicable in the European Union. All accounting standards and interpretations requiring application for financial years starting 1 January 2017 have been taken into account.

The financial statements of the companies included in the Combined Financial Statements have been prepared pursuant to uniform accounting principles. The income statement in the Combined Financial Statements was prepared using the nature of expense method. The financial years of RZF and RZAG and their subsidiaries (hereinafter referred to as the "groups" for short) correspond to the calendar year. Unless otherwise indicated, all disclosures are in millions of euros (€ million). Rounding may result in differences of ± one unit (€, %, etc.).

These financial statements were released for publication by the Management Boards on 23 March 2018.

RZF's registered office is at Domstraße 20 in Cologne, Germany, and is registered in the Register of Cooperative Societies at the Local Court of Cologne under GnR 631. RZAG's registered office is also at Domstraße 20 in Cologne, Germany, and is registered in the Commercial Register of the Local Court of Cologne under HRB 5281. The groups' business activities are divided into five "business segments", which are subdivided further into divisions and business units. The main focus of the business activities is on the chain food retail sector, in both the full-range stores and discount segments.

The new management structure was fully implemented as at 1 January 2017: The National Full-Range Stores and National Discount Stores business segments were combined under the newly created Retail Germany business segment, and the International Full-Range Stores and International Discount business segments were combined under the newly created Retail International business segment. 

In this connection, the real estate companies were reallocated from the Other business segment, and the production and sale of baked goods by Glockenbrot Bäckerei GmbH & Co. oHG, Cologne, under the Glocken Bäckerei brand, as well as the production of meat and sausage products by Wilhelm Brandenburg GmbH & Co. oHG, Cologne, under the Wilhelm Brandenburg brand, were also transferred from the Other business segment to Retail Germany. The business segment now includes the REWE, Penny Germany and Retail Germany Central Companies divisions. Responsibility for this business segment rests with REWE Beteiligungs-Holding Aktiengesellschaft, Cologne. 

In the REWE division, the Retail Germany business segment operates the chain food retail sector in Germany under the REWE, REWE CITY, REWE CENTER and REWE to go. Retail Germany also has an online presence with REWE.de. It also supplies independent retail dealers, group companies and REWE partner retailers in the merchandise wholesale business. This business is operated primarily by REWE Markt GmbH, Cologne. In addition, the Penny Germany division operates the chain food retail sector in Germany under the PENNY sales brand via Penny-Markt Gesellschaft mit beschränkter Haftung, Cologne.

The Retail International business segment covers the Austrian Full-Range Stores, CEE Full-Range Stores and Penny International divisions. In the Austrian Full-Range Stores division, supermarkets and consumer stores are operated in Austria under the BILLA, MERKUR and ADEG brands as well as drug stores under the BIPA brand. In the CEE Full-Range Stores division, the Retail International stores are also represented with the BILLA supermarket format in Bulgaria, Russia, Slovakia, the Czech Republic and Ukraine. The business segment's key companies are Billa Aktiengesellschaft, Wiener Neudorf, Austria, and Merkur Warenhandels-AG, Wiener Neudorf, Austria. The Penny International division operates discount stores in Italy, Austria, Romania, the Czech Republic and Hungary via separate sales and distribution companies in each country operating under the PENNY MARKET brand.

The Travel and Tourism business segment comprises a number of tour operators, specialists which offer a number of travel agency chains, franchise sales channels and online portals under the DER Touristik umbrella brand. Travel and Tourism operates in Germany as well as in the Benelux countries, Finland, the United Kingdom, Austria, Eastern Europe, Switzerland and Scandinavia. The business is operated mainly via DER Touristik Deutschland GmbH, Cologne, primarily under the brands ADAC REISEN, Apollo, DER.COM, DER Reisebüro, DERPART, DERTOUR, EXIM Tours, helvetic tours, ITS, Jahn Reisen, KUONI and Meier's Weltreisen. 

The National Specialist Stores business segment operates DIY stores under the toom Baumarkt brand. The business segment is operated primarily by toom Baumarkt GmbH, Cologne. 

The Other business segment provides corporate services for REWE Group companies. This segment handles goods procurement through REWE Group Buying GmbH, deliveries to wholesale customers through RZAG, and centralised settlement through RZF. The business segment's other key companies are the financing company REWE International Finance B.V., Venlo, Netherlands (hereinafter referred to as "RIF" for short), REWE Digital GmbH, Cologne, which bundles its online activities, and the energy service provider -EHA-Energie-Handels-Gesellschaft mbH & Co. KG, Hamburg.

For an exhaustive overview of the Group's subsidiaries, please refer to the List of Shareholdings appended to the notes.