Food Lion 2014 Annual Report Download - page 105

DELHAIZE GROUP FINANCIAL STATEMENTS 2014 // 101
7. Intangible Assets
Intangible assets consist primarily of trade names, customer relationships, purchased and internally developed software,
favorable lease rights, prescription files and other licenses. Delhaize Group has determined that its trade names have an
indefinite useful life and are not amortized, but are tested annually for impairment and whenever events or circumstances
indicate that impairment may have occurred. Trade names are tested for impairment by comparing their recoverable amount,
being their FVLCTS (Level 3), with their carrying amount. The recoverable amount is estimated applying the royalty-relief-
method, using revenue projections and discount rates of each operating entity consistent with the assumptions applied as part of
the annual goodwill impairment testing (see Note 6). The Group applied estimated royalty rates of 0.45% and 0.70% for Food
Lion and Hannaford, respectively, and 0.62% (Tempo) and 1.41% (Maxi) for Serbia, depending on the local strength of each
brand.
During the second quarter of 2014, the Group identified impairment indicators with respect to its Serbian operations and updated
its impairment review of its Serbian trade names, recognizing impairment losses of €10 million. Royalty rates applied range from
0.62% (Tempo) to 1.43% (Maxi).
In 2013, the Group identified impairment indicators with respect to its Serbian and Bulgarian trade names. Royalty rates for the
various brands range from 0.54% (Piccadilly) to 1.20% (Maxi). Further, the Group decided to retire its Mini Maxi and Piccadilly
Express brands and to convert these stores into a new format and therefore fully impaired these trade names. The above
resulted in the recognition of impairment losses of €67 million and €4 million for Serbia and Bulgaria, respectively. As part of the
disposal of Harveys (see Note 5.2), $5 million (€4 million) were reclassified from the CGU Food Lion to assets held for sale.
During 2012 the Group fully impaired the Albanian trade name (€3 million), reflecting the measurement of the disposal group in
accordance with IFRS 5, and included this impairment in “Result from discontinued operations (net of tax)” (see Note 5.3).
Further, the Group recognized impairment losses in connection with the Piccadilly brands in Bulgaria (part of the “Southeastern
Europe” segment) for €15 million, reflecting the Group’s revised expectations on market conditions.
See Note 8 for a description of the impairment test for assets with finite lives.
(in millions of €)
Trade
Names
Developed
Software
Purchased
Software
Favorable
Lease
Rights
Other
Total
Cost at January 1, 2014
519
290
359
122
55
1 345
Additions
—
43
23
—
12
78
Sales and disposals
—
—
(2)
(4)
(3)
(9)
Acquisitions through business combinations
—
—
—
1
1
2
Transfers (to) from other accounts
—
2
9
—
(10)
1
Classified as held for sale
(29)
—
(1)
—
(1)
(31)
Currency translation effect
38
13
37
15
6
109
Cost at December 31, 2014
528
348
425
134
60
1 495
Accumulated amortization at January 1, 2014
—
(171)
(242)
(86)
(27)
(526)
Accumulated impairment at January 1, 2014
(85)
—
—
—
(2)
(87)
Amortization expense
—
(35)
(43)
(7)
(4)
(89)
Impairment losses
(10)
—
—
—
—
(10)
Sales and disposals
—
—
2
4
3
9
Classified as held for sale
19
—
—
—
1
20
Currency translation effect
4
(11)
(26)
(12)
(4)
(49)
Accumulated amortization at December 31, 2014
—
(217)
(309)
(100)
(32)
(658)
Accumulated impairment at December 31, 2014
(72)
—
—
(1)
(1)
(74)
Net carrying amount at December 31, 2014
456
131
116
33
27
763
Delhaize Group Annual Report 2014 • 103