Property, Plant and Equipment
Investment Property
Leases
Borrowing Costs
FINANCIAL STATEMENTS
There are no legal, regulatory, contractual, competitive, economic or other factors that limit the useful life of the trade names. The
assessment of indefinite life is reviewed annually to determine whether the indefinite life assumption continues to be supportable.
Changes, if any, would result in prospective amortization.
Property, plant and equipment is stated at cost less accumulated depreciation and impairment, if any. Acquisition costs include
expenditures that are directly attributable to the acquisition of the asset. Such costs include the cost of replacing part of the asset
and dismantling and restoring the site of an asset if there is a legal or constructive obligation and borrowing costs for long-term
construction projects if the recognition criteria are met. Major spare parts and servicing equipment that are used more than one
period are recognized as property, plant and equipment.
Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appro priate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably. Costs of day-to-day servicing of property, plant and equipment are recognized in the income statement as incurred.
Depreciation is calculated using the straight-line method based on the estimated useful lives of the related assets and starts
when the asset is available for use as intended by management. When significant parts of an item of property, plant and
equipment have different useful lives, they are accounted for as separate components of property, plant and equipment. Land is
not depreciated. The useful lives of tangible fixed assets are as follows:
Buildings 33 to 50 years
Permanent installations 3 to 25 years
Furniture, fixtures, equipment and vehicles 3 to 14 years
Leasehold improvements and property under finance lease shorter of lease terms and useful lives
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized within
"Other operating income" (see Note 27) or "Other operating expenses" (see Note 28) in the income statement.
Residual values, useful lives and methods of depreciation are reviewed at each financial year-end and adjusted prospectively, if
appropriate.
Investment property is defined as property (land or building - or part of a building - or both) held by Delhaize Group to earn rental
income or for capital appreciation or both, including property held for a currently undetermined future use, rather than for sale in
the ordinary course of business or for use in supply of goods or services or for administrative purposes and includes investment
property under construction. Delhaize Group recognizes any part of an owned (or leased under a finance lease) property that is
leased to third parties as investment property, unless it represents an insignificant portion of the property.
Investment property is measured initially at cost including transaction costs. Subsequent to initial recognition, Delhaize Group
elected to measure investment property at cost less accumulated depreciation and accumulated impairment losses, if any (i.e.,
applying the same accounting policies (including useful lives) as for property, plant and equipment). The fair values, which reflect
the market conditions at the balance sheet date, are disclosed in Note 9.
The determination of whether an agreement is, or contains, a lease is based on the substance of the agreement at inception
date. Leases are classified as finance leases when the terms of the lease agreement transfer substantially all the risks and
rewards incidental to ownership to the Group. All other leases are classified as operating leases.
Assets held under finance leases are recognized as assets at the lower of fair value or present value of the minimum lease
payments at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance
lease obligation. Lease payments are allocated between finance costs and a reduction of the lease obligation to achieve a
constant rate of interest over the lease term. Finance lease assets and leasehold improvements are depreciated over the shorter
of the expected useful life of similar owned assets or the relevant lease term.
Rents paid on operating leases are recognized as an expense on a straight-line basis over the lease term. Benefits received and
receivable as an incentive to enter into an operating lease are spread over the relevant lease term on a straight-line basis as a
reduction of rent expense.
In connection with investment property, where the Group is the lessor, leases where the Group does not transfer substantially all
the risk and rewards incident to the ownership of the investment property are classified as operating leases and are generating
rental income. Contingent rents are recognized as "Other operating income" (see Note 27) in the period in which they are earned.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial
period of time to get ready for its intended use ("qualifying assets") are capitalized as part of the respective asset. All o ther
borrowing costs are expensed as incurred. Borrowing costs consist of interest and other costs that Delhaize Group incurs in
connection with the borrowing of funds.
