6. Goodwill
usd\
EUR
FINANCIAL STATEMENTS
impairment loss of €12 million to write down the carrying value of Delhaize Montenegro and Sweetbay, Harveys and Reid's to
their estimated fair value less costs to sell.
In 2012, "Other operating expenses" consisted of €137 million of impairment losses: €35 million related to underperforming
Sweetbay stores, €9 million to underperforming Bottom Dollar Food stores, €42 million in Bulgaria (of which €15 million on
goodwill and €15 million on the Piccadilly brand name), €34 million in Bosnia Herzegovina (of which €26 million on goodwill),
and €17 million in Montenegro (of which €10 million on goodwill). Delhaize Group recognized an impairment loss of €16 million
for Delhaize Albania.
(in millions of
2014
2013
2012
Gross carrying amount at January 1
3 215
3 396
3 487
Accumulated impairment at January 1
(256)
(207)
(73)
Net carrying amount at January 1
2 959
3 189
3 414
Acquisitions through business combinations and adjustments to initial purchase accounting
13
3
3
Classified as held for sale (net amount)
(1)
(3)
(8)
Impairment losses
(138)
(124)
(136)
Currency translation effect (net amount)
314
(106)
(84)
Gross carrying amount at December 31
3 485
3 215
3 396
Accumulated impairment at December 31
(338)
(256)
(207)
Net carrying amount at December 31
3 147
2 959
3 189
Goodwill is allocated and tested for impairment at the cash-generating unit (CGU) level that is expected to benefit from synergies
of the combination the goodwill resulted from, which at Delhaize Group represents an operating entity or country level, being also
the lowest level at which goodwill is monitored for internal management purpose.
During 2012, the Group revisited its reporting to the CODM for its U.S. operations (see Note 3). As a consequence, Delhaize
Group's U.S. operations represent separate operating segments at which goodwill needs to be reviewed for impairment testing
purposes.
The Group's CGUs with significant goodwill allocations are detailed below:
(in millions)2014 2013 2012
Food Lion
USD'
1 684
1 684
1 688
Hannaford
1 558
1 555
1 555
United States
EUR
2 670
2 349
2 458
Greece
214
209
207
Belgium
EUR
186
186
186
Serbia
EUR
50
194
318
Romania
EUR
27
20
20
Bulgaria
EUR
1
Total EUR 3 147 2 959 3 189
Delhaize Group conducts an annual impairment assessment for goodwill and, in addition, whenever events or circumstances
indicate that an impairment may have occurred. The impairment test of goodwill involves comparing the recoverable amount of
each CGU with its carrying value, including goodwill, and recognition of an impairment loss if the carrying value exceeds the
recoverable amount.
The recoverable amount of each operating entity is determined based on the higher of value in use ("VIU") and the fair value less
cost to sell ("FVLCTS"):
The VIU calculations use local currency cash flow projections based on the latest available financial plans approved by
management for all CGUs, adjusted to ensure that the CGUs are tested in their current condition, covering a three-year
period, based on actual results of the past and using observable market data, where possible. Cash flows beyond the three-
year period are extrapolated to five years.
Growth 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 growth 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.
