Gr
Firo wth rates and operating margins used to estimate future performance are equally based on past performance and
experience of growth rates and operating margins achievable in the relevant market and in line with market data, where
possible. Beyond five years, perpetual growth rates are used which do not exceed the long-term average growth rate for the
supermarket retail business in the particular market in question and the long-term economic gro wth of the respective
country. These pre-tax cash flows are discounted applying a pre-tax rate, which is derived from the CGU's WACC (Weighted
Average Cost of Capital) in an iterative process as described by IAS 36.
The fair value less cost to sell ("FVLCTS") is based on discounted cash flow calculations, in local currencies, using cash fl ow
projections based on the latest available financial plans approved by management for all CGUs, as explained above. Cash
flows beyond the three-year period are extrapolated to ten years in line with market participant assumptions. Beyond ten
years, perpetual growth rates do not exceed the long-term average growth rate for the supermarket retail business in the
particular market in question and the long-term economic growth of the respective country. Operating margins are kept in
line with longer ter
i arket assumptions. Delhaize
Group u
ses pre-tax cash flows which are discounted applying a pre-tax
rate, being derived from the CGU's WACC as described above. Earnings multiples paid for similar companies in the market
are used to ensure appropriateness of the FVLCTS estimates and overall consistency.
United States
The recoverable amount of the U.S. operating segments Food Lion and Hannaford has been determined based on VIU
calculations. The key assumptions used for the VIU calculations were as follows:
Perpetual Pre"tax
Growth Rate discount rate
2012:
Food Lion
Hannaford
2011:
Food Lion
Hannaford
2010:
Food Lion
Hannaford
2.3%
2.3%
2.3%
2.3%
2.3%
2.3%
10.1%
9.6%
10.4%
10.4%
11.7%
10.8%
Management believes that the assumptions used in the VIU c alculations represent the best estimates of future development and
is of the opinion that no reasonable possible change in any of the key assumptions mentioned above would cause the carrying
value of the cash generating units to exceed their recoverable amounts. The G roup estimated that a decrease in growth rate by
50 basis points, keeping all other assumptions constant, would decrease the 2012 VIU for both Food Lion and Hannaford by
$396 million. An increase of the discount rate by 100 basis points, keeping all other constant, would decrease the 2012 VIU fo r
Food Lion and Hannaford by $891 million and $893 million, respectively. A simultaneous increase in discount rate and decrease
in growth rates by the before mentioned amounts would not result in the carrying amount of Food Lion or Hannaford exceeding
the VIU. Alter natively, a reduction in the total projected future cash flows by 10%, keeping all other constant, would decrease the
2012 VIU for F ood Lion and Hannaford by $485 million and $493 million, respectively and would not result in the carrying amount
of Food Lion or Hannaford exceeding the VIU.
Euro p e
The recoverable amount of the operating segments Belgium, Greece and Romania has been determined
calculations. The key assumptions used for the VIU calculations were as follows:
P erpetual
Growth Rate
2012:
Belgii
Roma
2011:
Belgii
Roma
2010:
Belgii
Roma
2.4%
1.6%
2.3%
3.3%
2.5%
2.7%
2.9%
2.5%
3.7%
based on VIU
P re-tax
9.9%
14.4%
11.7%
10.3%
14.3%
11.9%
7.8%
7.0%
14.7%
DELHAIZE GROUP FINANCIAL STATEMENTS '12 97
