Business Combinations and Goodwill
Delhaize Group Annual Report 2014 81
control ceases. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full.
Non-controlling interests represent the portion of profit or loss and net assets that is not held by the Group and are presented
separately in the consolidated income statement and within equity in the consolidated balance sheet, separately from the
parent shareholders' equity.
Transactions with non-controlling interests that do not result in loss of control are accounted for as transactions between
shareholders and therefore have no impact on profit or loss (this applies also to related acquisition costs) nor on goodwill.
The difference between fair value of any consideration received or paid and the relevant share acquired or disposed of the
carrying value of net assets of the subsidiary is recorded directly in retained earnings.
The list of all subsidiaries of the Group is presented in Note 36.
Investments in joint ventures: A joint venture is a type of joint arrangement whereby the parties that have joint control of the
arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of
an arrangement, which exists only when decisions about the relevant activities require unanimous consent.
Investments in joint ventures are accounted for using the equity method. Under this method, interests in joint ventures are
initially recognized at cost. The carrying amount of the investment is adjusted to recognize changes in the Group's share of
net assets of the joint ventures following the acquisition date. Goodwill relating to the joint venture is included in the carrying
amount of the investment and is neither amortized nor individually tested for impairment.
The consolidated income statement reflects the Group's share of the results of operations of the joint venture. Any change in
other comprehensive income of the joint venture is presented as part of the Group's other comprehensive income. In
addition, when there has been a change recognized directly in the equity of a joint venture, the Group recognizes its share of
any changes, when applicable, in the statement of changes in equity. Unrealized gains and losses resulting from
transactions between the Group and its joint ventures are eliminated to the extent of the interest in each joint venture.
The aggregate of the Group's share of profit or loss of its joint ventures is shown on the face of the consolidated income
statement outside operating profit.
After application of the equity method, the Group determines whether it is necessary to recognize an impairment loss on its
investment in joint ventures. If there is an objective evidence of impairment, the Group calculates the amount of impairment
as the difference between the recoverable amount of a joint venture and its carrying amount and recognizes any loss as
"Share of results of joint venture equity accounted" in profit or loss.
Upon loss of joint control over a joint venture, the Group measures and recognizes any retained investment at its fair value.
Any difference between the carrying amount of a joint venture upon loss of joint control and the fair value of the retained
investment and proceeds from disposal is recognized in profit or loss.
The Group has assessed its rights and obligations in connection with its investment in Super Indo and has classified it as
joint venture (see Note 36).
Investments in associates: The Group currently holds no investments in entities over which Delhaize Group has significant
influence, but no control or joint control ("associates").
Business combinations are accounted for using the acquisition method. Under this method, the cost of an acquisition is
measured as the aggregate of the consideration transferred, measured at acquisition date fair value, and the amount of any non-
controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the
acquiree, either at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition costs incurred are
expensed and included in "Selling, general and administrative expenses". When Delhaize Group acquires a business, it
assesses the financial assets and liabilities assumed for appropriate classification and designation based on the facts and
circumstances at the acquisition date (except for lease and insurance agreements, which are classified on the basis of the
contractual terms and other factors at the inception of the respective contract). This includes the separation of embedded
derivatives in host contracts by the acquiree. If the business combination is achieved in stages, the acquisition date fair value of
the acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or
loss. Any contingent consideration to be transferred by the acquirer will be initially recognized and subsequently measured at fair
value except for contingent considerations classified as equity instrument that are not re-measured following initial measurement.
Goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and the amount
recognized for non-controlling interests over the net identifiable assets acquired and liabilities assumed. If this consideration is
lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or loss.
After initial recognition, goodwill is not amortized, but annually reviewed for impairment and whenever there is an indication that
goodwill may be impaired. For the purpose of testing goodwill for impairment, goodwill is allocated to each of the Group's ca sh
generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or
liabilities of the acquiree are assigned to those units.
