formula that takes into consideration the profit attributable to the company's shareholders after certain adjustments. The
Sales of products to the Group's retail customers are recognized at the point of sale and upon delivery of groceries to
included in "Other operating income" (see Note 27).
Other post-employment benefits, some Group entities provide post-retirement health care benefits to their retirees. The
Group's net obligation in respect of long -term employee benefit plans other than pension plans is the amount of future
benefit that employees have earned in return for their services in the current or prior periods. Such benefits are discounted
to determine their present value and the fair value of any related asset is deducted. The calculation is performed using the
projected unit credit method and any actuarial gain or loss is recognized in OCI in the period in which it arises. These
obligations are valued annually by independent qualified actuaries. F or details, see Delhaize Group's other post-e mploym ent
benefit plans in Note 21.2.
Terminati o n benefits, are recognized when the Group is demonstrably committed, without realistic possibility of withdrawal,
to a detailed formal plan to terminate employment before the normal retirement date. In addition, Delhaize Group recognizes
expenses in connection with termination benefits for voluntary terminations if the Group has made an offer of voluntary
termination, if it is probable that the offer will be accepted and the number of acceptances can be measured reliably.
Profit-sharing and bonus plans, the Group recognizes a liability and an expense for bonuses and profit-sharing based on a
Group recognizes a provision if contractually obliged or if there is a past practice that has created a constructive obligation
(see Note 21.3).
Share-based payments, the Group operates various equity-settled share-based compensation plans, under which the entity
receives services from employees as consideration for equity instruments (options, warrants or restricted stock units) of the
Group. The fair value of the employee services received in exchange for the grant of the share-based awards is recognized
as an expense. The total amount to be expensed is determined by reference to the grant date fair value of the share-based
awards and is calculated using the Black-Scholes-Merton valuation model (for details see Note 21.3). T he share-based
compensation plans operated by Delhaize Group currently do not contain any (non-)market vesting conditions, but only
service vesting conditions.
The total amount expensed is recognized in the income statement - together with a corresponding increase in equity - over
the vesting period of the share-based award, which is the period over which all of the specified vesting conditions are to be
satisfied. The cumulative expense recognized fo r equity-settled transactions at each reporting date until the vesting date
reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments
that will ultimately vest. No expense is recognized for awards that do not ultimately vest.
In the event of a modification of the terms of an equity-settled award, the minimum expense recognized is the expense as if
the terms had not been modified. An additional expense would be recognized for any modification which increases the total
fair value of the share-based payment arrangement or is otherwise beneficial to the employee as measured at the date of
m odification.
Wh ere an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not
yet recognized for the award is recognized immediately. However if a new award is substituted for the cancelled award and
designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were
a modification of the original award.
Any proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and
share premium when options are exercised. The dilutive effect of outstanding (vested and unvested) options is reflected as
additional share dilution in the computation of diluted earnings per share (see Note 31).
Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be
reliably measured. Revenue is measured at the fair value of the consideration received net of discounts, rebates, and sales taxes
or duty. The G roup assesses its revenue arrangements against the criteria included in the appendix to IAS 18 Revenue to
determine if it is acting as principal or agent.
internet or telephone order customers. In addition, Delhaize Group generates revenue from sales to its wholesale
customers, which are recognized upon delivery to or pick-up by the wholesale customer.
As stated above, sales are recorded net of sales taxes, value-added taxes and discounts and incentives. These include
discounts from regular retail prices for specific items and "buy-one, get-one -free -type incentives that are offered to retail
customers through the Group's customer loyalty programs. Discounts provided by vendors
Re
are recorded as a receivable.
\evenue from the sale of gift cards and gift certificates is recognized when the gift card or gift certificate is redeemed by the
retail customer.
The G roup maintains various loyalty points programs whereby customers earn points for future purchases. These customer
loyalty credits are accounted for as a separate component of the sales transaction in which they are granted. A portion of the
fair value of the consideration received is allocated to the award credits and deferred. This is recognized as revenue when
the award credits are redeemed.
The Group generates limited revenues from franchise fees, which are recognized in net sales when the services are
provided or franchise rights used.
For certain products or services, such as the sale of lottery tickets, third-party prepaid phone cards, etc., Delhaize Group
acts as an agent and consequently records the a mount of commission income in its net sales.
Rental income from investment property is recognized in profit or loss on a straight-line basis over the term of the lease and
DELHAIZE GROUP FINANCIAL STATEMENTS '12 85
