Employee Benefits
Delhaize Group Annual Report 2014 89
income. The adequacy of the closed store provision is dependent upon the economic conditions in which stores are located
which will impact the Group's ability to realize estimated sublease income. Owned and finance leased stores that are closed
and rented to third parties are reclassified as investment property (see Note 9).
When termination costs are incurred in connection with a store closing, a liability for the termination benefits is recognized in
accordance with IAS 19 Employee Benefits, at the earlier of the following dates: (a) when the Group can no longer withdraw
the offer of termination benefits and (b) when the entity recognizes costs for restructuring that is within the scope of IAS 37
Provisions and involves the payment of termination benefits (see also "Restructuring provisions" and "Employee Benefits"
below).
Closed store provisions are reviewed regularly to ensure that amounts appropriately reflect management's best estimate of
the outstanding commitments and that additional expenses are provided for or amounts that are no longer needed for their
originally intended purpose are released.
Self-insurance: Delhaize Group is self-insured for workers' compensation, general liability, vehicle accidents, pharmacy
claims, health care and property insurance in the U.S. up to certain retentions and holds insurance contracts with external
insurers for any costs in excess of these retentions. The self-insurance liability is determined actuarially, based on claims
filed and an estimate of claims incurred but not reported.
Restructuring provisions are recognized when the Group has approved a detailed formal restructuring plan, and the
restructuring either has commenced or has been announced to those affected by it. Any restructuring provision contains only
those expenditures that are directly arising from the restructuring and are both necessarily entailed by the restructuring and
not associated with the ongoing activity of the Group. Future operating losses are therefore not provided for.
IFRIC 21 Levies, an interpretation of IAS 37 Provisions, requires the recognition of a levy imposed under a legislation issued
by a government (being a local, national or international government, government agencies and similar bodies) when the
Group can no longer avoid the outflow of economic benefit by its own action.
A defined contribution plan is a post-employment benefit plan under which the Group pays fixed contributions and has no
legal or constructive obligation to pay further contributions regardless of the performance of the funds held to satisfy future
benefit payments. The Group makes contributions to defined contribution plans on a mandatory, contractual or voluntary
basis. The contributions are recognized as "Employee benefit expense" when they are due (see Note 21.1). Prepaid
contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.
The defined contribution plans of the Group's Belgian operations include a legally guaranteed minimum return. This
minimum return is usually insured by an external insurance company that receives and manages all plan contributions. As
the return guaranteed by that third party can be below the legally required return, these plans have also some defined
benefit plan features, as the Group is exposed to the investment funding risk relating to the difference in returns, if any.
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan (see above), which normally
defines an amount of benefit that an employee will receive upon retirement, usually dependent on one or more factors such
as age, years of service and compensation. The Group's net obligation recognized in the balance sheet for defined benefit
plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, which
in the case of funded plans are usually held by a long-term employee benefit fund or qualifying insurance company and are
not available to the creditors of the Group nor can they be paid directly to the Group.
The defined benefit obligation is calculated regularly by independent actuaries using the projected unit credit method. The
present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest
rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have
maturity terms approximating the duration of the related pension liability. For currencies where there is no deep market in
such bonds, the market rates on government bonds are used. When the calculation results in a benefit to the Group, the
recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan
or reductions in future contributions to the plan. An economic benefit is available to the Group if it is realizable during the life
of the plan or on settlement of the plan liabilities.
The components of the defined benefit cost include (a) service cost (current and past), (b) net interest on the net defined
benefit liability (asset) and (c) remeasurements of the net defined benefit liability (asset). Past service costs are recognized
immediately in the income statement at the earlier of (a) the date of the plan amendment or curtailment and (b) the date the
Group recognizes restructuring-related costs. Net interest on net defined benefit liability (asset) is calculated by applying the
discount rate to the net defined benefit liability (asset).
Service cost and net interest are recognized in profit or loss in both "Cost of sales" and in "Selling, general and
administrative expenses".
The remeasurements comprise (a) actuarial gains and losses, (b) the effect of asset ceiling (if applicable) and (c) the return
on plan assets (excluding interest) and are recognized immediately in the period in which they occur in OCI. The recorded
remeasurements are never recycled to profit or loss but they can be transferred within equity.
See Note 21.1 for details of Delhaize Group's defined benefit plans.
