Non-derivative Financial Liabilities
FINANCIAL STATEMENTS
comprise "Other financial assets" (see Note 12), "Receivables" (see Note 14) and "Cash and cash equivalents" (see Note
15).
Trade receivables are subsequently measured at amortized cost less an impairment allowance. The allowance for
impairment of trade receivables is established (on a separate allowance account) when there is objective evidence that the
Group will not be able to collect all amounts due according to the original terms of the receivables and the amount of the loss
is recognized in the income statement within "Selling, general and administrative expenses". Impaired trade receivables are
derecognized when they are determined to be uncollectible.
Available for sale investments: Available for sale investments are financial assets that are either designated in this category
or not classified in any of the other categories. After initial measurement, available for sale investments are measured at fair
value with unrealized gains or losses recognized directly in OCI, until the investment is derecognized or impaired, at which
time the cumulative gain or loss recorded in the available for sale reserve is recognized in the income statement as a
reclassification adjustment.
Delhaize Group mainly holds quoted investments and the fair value of these is predominantly based on current bid prices
(see Note 10.1). The Group monitors the liquidity of the quoted investments to identify inactive markets, if any. In a very
limited number of cases, e.g., if the market for a financial asset is not active (and for unlisted securities), the Group
establishes fair value by using valuation techniques (see Note 2.1).
For available for sale financial assets, the Group assesses at each balance sheet date whether there is objective evidence
that an investment or a group of investments is impaired. For investments in debt instruments, the impairment is assessed
based on the same criteria as financial assets carried at amortized cost (see above "Loans and receivables"). Interest
continues to be accrued at the original effective interest rate on the reduced carrying amount of the asset. If, in a subsequent
year, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the
impairment loss was recognized in the income statement, the impairment loss is reversed through the income statement. For
investments in equity instruments the objective evidence for impairment includes a significant or prolonged decline in the fair
value of the investment below its costs. Where there is evidence of impairment, the cumulative loss - measured as the
difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously
recognized in the income statement - is removed from equity and recognized in the income statement. Impairment losses on
equity investments are not reversed through the income statement. Increases in their fair value after impairment are
recognized directly in OCI.
Available for sale financial assets are included in "Investments in securities" (see Note 11). They are classified as non-
current assets except for investments with a maturity date less than 12 months from the balance sheet date.
Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired, or if the Group
transferred the financial asset to another party and does not retain control or substantially all risks and rewards of the financial
asset.
IAS 39 Financial Instruments: Recognition and Measurement contains two categories for non-derivative financial liabilities
(hereafter "financial liabilities"): financial liabilities at fair value through profit or loss and financial liabilities mea sured at amortized
cost. Delhaize Group mainly holds financial liabilities measured at amortized cost that are included in "Debts", "Borrowings",
"Accounts payable" and "Other liabilities". In addition, the Group issued financial liabilities, which are part of a designat ed fair
value hedge relationship (see Note 19).
All financial liabilities are recognized initially at fair value, plus, for instruments not at fair value through profit or loss, any directly
attributable transaction costs.
Financial liabilities measured at amortized cost are measured at amortized cost after initial recognition. Amortized cost is
computed using the effective interest method less principal repayment. Associated finance charges, including premiums and
discounts are amortized or accreted to finance costs using the effective interest method and are added to or subtracted from the
carrying amount of the instrument. The fair values of these financial liabilities are disclosed in Note 18.1.
An exchange between existing borrower and lenders or a modification in terms of a debt instrument is accounted for as a debt
extinguishment of the original financial liability and the recognition of a new financial liability, if the terms are substantially
different. For the purpose of IAS 39, the terms are substantially different if the discounted presented value of the cash flows
under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is
at least 10 percent different from the discounted present value of the remaining cash flows of the original financial liability. If the
exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the
liability and are amortized, together with the difference in present values, over the remaining term of the modified financial
liability.
Financial liabilities are derecognized when the Group's obligations specified in the contract expire or are discharged or can celled.
Derivative Financial Instruments
While at recognition the initial measurement of derivative contracts is at fair value, the subsequent accounting for derivative
financial instruments depends on whether the derivative is designated as an effective hedging instrument and, if so, the nature of
the item being hedged (see "Hedge Accounting" below).
