Revenue Recognition
FINANCIAL STATEMENTS
Other post-employment benefits: Some Group entities provide post-retirement health care benefits to their retirees. The
Group's net obligation in respect of long-term employee benefit plans other than pension plans is the amount of future
benefit that employees have earned in return for their services in the current or prior periods. Such benefits are discounted to
determine their present value and the fair value of any related asset is deducted. The calculation is performed using the
projected unit credit method and any actuarial gain or loss is recognized in OCI in the period in which it arises. These
obligations are valued annually by independent qualified actuaries. For details, see Delhaize Group's other post-employment
benefit plans in Note 21.2.
Termination benefits: Are payable when employment is terminated before the normal retirement date, or when an employee
accepts voluntary redundancy in exchange for these benefits. Termination benefits are recognized at the earlier of when the
entity can no longer withdraw the offer of those benefits and when the Group recognizes costs for a restructuring in
accordance with IAS 37, involving the payment of termination benefits. Benefits that are expected to be settled more than 12
months after the end of the annual reporting period are discounted to their present value.
Bonus plans: The Group recognizes a liability and an expense for short-term and long-term cash bonuses based on formulas
that take into consideration the Company's results. The Group recognizes a provision if contractually obliged or if there is a
past practice that has created a constructive obligation (see Note 20.3).
Share-based payments: The Group operates various equity-settled share-based compensation plans, under which the entity
receives services from employees as consideration for equity instruments (options, warrants, performance and restricted
stock units) of the Group. The fair value of the employee services received in exchange for the grant of the share-based
awards is recognized as an expense. The total amount to be expensed is determined by reference to the grant date fair
value of the share-based awards and is calculated for stock options and warrants using the Black-Scholes-Merton valuation
model (for details see Note 21.3). The options, warrants and restricted stock units compensation plans contain only service
vesting conditions, while the performance stock unit plan contains non-market performance conditions and service vesting
conditions.
The total amount expensed is recognized in the income statement - together with a corresponding increase in equity - over
the vesting period of the share-based award, which is the period over which the vesting conditions have to be satisfied. The
cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent
to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately
vest, including an assessment of the non-market performance conditions. No expense is recognized for awards that do not
ultimately vest.
In the event of a modification of the terms of an equity-settled award, the minimum expense recognized is the expense as if
the terms had not been modified. An additional expense would be recognized for any modification which increases the total
fair value of the share-based payment arrangement or is otherwise beneficial to the employee as measured at the date of
modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not
yet recognized for the award is recognized immediately. However if a new award is substituted for the cancelled award and
designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were
a modification of the original award.
Any proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and
share premium when options are exercised. The dilutive effect of outstanding (vested and unvested) options is reflected as
additional share dilution in the computation of diluted earnings per share (see Note 31).
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be
reliably measured. Revenue is measured at the fair value of the consideration received net of discounts, rebates, and sales taxes
or duty. The Group assesses its revenue arrangements against the criteria included in the appendix to IAS 18 Revenue to
determine if it is acting as principal or agent.
Sales of products to the Group's retail customers are recognized at the point of sale and upon delivery of groceries to
internet or telephone order customers. In addition, Delhaize Group generates revenue from sales to its wholesale customers,
which are recognized upon delivery to or pick-up by the wholesale customer.
As stated above, sales are recorded net of sales taxes, value-added taxes and discounts and incentives. These include
discounts from regular retail prices for specific items and "buy-one, get-one-free"-type incentives that are offered to retail
customers through the Group's customer loyalty programs. Discounts provided by vendors are recorded as a receivable.
Revenue from the sale of gift cards and gift certificates is recognized when the gift card or gift certificate is redeemed by the
retail customer.
The Group maintains various loyalty points programs whereby customers earn points for future purchases. These customer
loyalty credits are accounted for as a separate component of the sales transaction in which they are granted. A portion of the
fair value of the consideration received is allocated to the award credits and deferred. This is recognized as revenue when
the award credits are redeemed.
