Total
FINANCIAL STATEMENTS
Management believes that the assumptions used in the recoverable amount calculations 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 Group estimated that a decrease
in growth rate by 50 basis points, keeping all other assumptions constant, would decrease the 2014 recoverable amount for
Belgium, Greece and Romania by €129 million, €59 million and €20 million, respectively. An increase of the discount rate by 100
basis points, keeping all other assumptions constant, would decrease the 2014 recoverable amount for Belgium, Greece and
Romania by €287 million, €146 million and €49 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 Belgium, Greece or Romania
exceeding the recoverable amount. Alternatively, a reduction in the total projected future cash flows by 10%, keeping all other
assumptions constant, would decrease the 2014 recoverable amount for Belgium, Greece and Romania by €167 million,
€116 million and €44 million, respectively and would not result in the carrying amount of Belgium, Greece or Romania exceeding
the recoverable amount.
Considering the expected longer term growth of the relatively young operations in Serbia, the recoverable amount is determined
based on FVLCTS estimates.
In 2012, Delhaize Group impaired 100% of the then recognized goodwill related to Bulgaria, Bosnia Herzegovina and
Montenegro and recognized a €85 million impairment loss with respect to the Serbian goodwill.
During 2013, the general economic situation in Serbia worsened significantly, impacting the Group's short- to mid-term
expectations for its Serbian operations and resulting in an impairment indicator. Consequently, Delhaize Group performed an
impairment review of its Serbian goodwill and recognized an additional impairment loss of €124 million.
During 2014, the Serbian economy continued to struggle due to the impact of fiscal tightening, lower inflow of investments,
and the overall fragile situation in the Serbian and international markets. During the second quarter, the country was further
hit by a devastating flooding, which further negatively impacted the economy. At the same time, competition further
strengthened in the retail market. Due to this, the Group reconsidered its estimates and forecasts in connection with its
Serbian business and concluded that the before said had a negative short-term impact on the cash flow projections of
Delhaize Serbia, providing goodwill impairment indicators. Consequently, Delhaize Group updated its impairment review of
its Serbian goodwill and recognized impairment charges of a total amount of €138 million.
The key assumptions used and the recognized impairment losses in the various years were as follows:
Impairment Loss
Perpetual Pre-tax Recognized
Growth Rate Discount Rate (in millions)
2014:
Serbia 3.0% 15.1% EUR 138
2013:
Serbia 2.8% 15.1% EUR 124
2012:
Serbia
3.7%
14.6%
EUR
85
Bosnia Herzegovina
2.7%
10.7%
EUR
26
Bulgaria
2.3%
16.1%
EUR
15
Montenegro
3.4%
14.1%
EUR
10
EUR
136
For the annual goodwill impairment testing of Delhaize Serbia, Delhaize Group applied a 3.2% perpetual growth rate and a
15.2% pre-tax discount rate, which did not result in any further impairment. The Group estimated that a decrease in growth rate
by 50 basis points, keeping all other assumptions constant, would decrease the recoverable amount of Delhaize Serbia by
€9 million and result in the carrying amount exceeding the recoverable amount by €2 million. An increase of the discount rate by
100 basis points, keeping all other assumptions constant, would decrease the recoverable amount by €41 million and result in
the carrying amount exceeding the recoverable amount by €33 million. A simultaneous increase in discount rate and decrease in
growth rates by the before mentioned amounts would decrease the recoverable amount by €48 million and result in the carrying
amount exceeding the recoverable amount by €40 million. Alternatively, a reduction in the total projected future cash flows by
10%, keeping all other assumptions constant, would decrease the recoverable amount by €35 million and result in the carrying
amount exceeding the recoverable amount by €28 million.
Impairment losses are recognized in profit or loss in "Other operating expenses" (see Note 28).
In 2012, and as a result of the decision to sell the Group's Albanian operations (see Note 5.2), relating goodwill has been f ully
impaired to reflect the measurement of Albania at FVLCTS. The remeasurement loss is included in "Result from discontinued
operations (net of tax)" (see Note 5.3).
