2.6 Financial Risk Management, Objectives and Policies
Delhaize Group Annual Report 2014 93
For financial liabilities there were no changes to classification and measurement except for the recognition of changes in
own credit risk in other comprehensive income for liabilities that are designated in the measurement category at fair value
through profit or loss, which so far does not impact the Group.
Finally, IFRS 9 retains the three types of hedge accounting mechanisms, but introduces greater flexibility to the types of
transactions eligible for hedge accounting and relaxes, for example, the requirements for hedge effectiveness by replacing
the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging
instrument and for the "hedged ratio" to be the same as the one management actually uses for risk management purposes.
Detailed documentation is still required but is different to that currently prepared under IAS 39, including information about
an entity's risk management activities.
The Group expects that IFRS 9 will have some impact on the consolidated financial statements, but is not practicable to
provide a reasonable estimate until the full review has been finalized.
IFRS 15 Revenue from Contracts with Customers (applicable for annual periods beginning after January 1, 2017): In 2014,
the IASB issued the new revenue recognition standard which establishes a single comprehensive model for entities in
accounting for revenue arising from contracts with customers. The standard will supersede currently applicable guidance,
amongst others and for Delhaize Group most relevant, IAS 18 Revenue and IFRIC 13 Customer Loyalty Programmes.
The single model's core principle of IFRS 15 is that an entity should recognize revenue to depict the transfer of promised
goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services.
The standard introduces a five-step approach for the revenue recognition process and the new term "performance
obligation," which represents a promise made by the entity in the contract to a customer which is either (a) a good or servic e
(or a bundle of goods or services) that is distinct, or (b) a series of distinct goods or services that are substantially the same
and that have the same pattern of transfer to the customer. The standard requires that the entity shall recognize revenue
when (or as) a performance obligation is satisfied, i.e., when control of the goods or services underlying the particular
performance obligation is transferred to the customer. The new guidance contains more detailed prescription on some
specific scenarios, like principal vs. agent consideration and adds significantly more extensive disclosure requirements.
Delhaize Group expects that IFRS 15 will have some impact on the consolidated financial statements, but is not practicable
to provide a reasonable estimate until the full review has been finalized.
The Group's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash
flow interest rate risk and price risk), credit risk and liquidity risk. Delhaize Group's principal financial liabilities, other than
derivatives, comprise mainly debts and borrowings and trade and other payables. These financial liabilities are mainly held in
order to raise funds for the Group's operations. On the other hand, the Group holds notes receivables, other receivables and
cash and cash equivalents that result directly from the Group's activities. The Group also holds several available for sale
investments. Delhaize Group exclusively uses derivative financial instruments to hedge certain risk exposures.
The risks to which the Group is exposed are evaluated by Delhaize Group's management and Board of Directors and discussed
in the section "Risk Factors" in this annual report.
