Food Lion 2014 Annual Report Download - page 134

130 // DELHAIZE GROUP FINANCIAL STATEMENTS 2014
The movements of the self-insurance provision were as follows:
(in millions of €)
2014
2013
2012
Self-insurance provision at January 1
133
142
143
Expense charged to earnings
155
174
190
Claims paid
(154)
(177)
(188)
Currency translation effect
18
(6)
(3)
Self-insurance provision at December 31
152
133
142
Actuarial estimates are judgmental and subject to uncertainty, due to, among many other things, changes in claim reporting
patterns, claim settlement patterns or legislation. Management believes that the assumptions used to estimate the self-insurance
provision are reasonable and represent management’s best estimate of the expenditures required to settle the present obligation
at the balance sheet date. Nonetheless, it is in the nature of such estimates that the final resolution of some of the claims may
require making significant expenditures in excess of the existing provisions over an extended period and in a range of amounts
that cannot be reasonably estimated. Future cash flows (currently estimated to last until 2032) are discounted with period specific
discount rates.
20.3 Other Provisions
The other provisions mainly consist of long-term incentives, early retirement plans, legal provisions and onerous lease contracts
(non-closed-store related), but also include amounts for asset removal obligations, restructuring plans and provisions for
litigation. The movements of the other provisions were as follows:
(in millions of €)
2014
2013
2012
Other provisions at January 1
80
72
83
Expense charged to profit and loss
157
13
6
Payments made
(5)
(10)
(17)
Transfer (to) from other accounts
2
6
4
Classified as held for sale
(4)
—
—
Currency translation effect
3
(1)
(4)
Other provisions at December 31
233
80
72
During 2014, Delhaize Group announced its intention to implement significant changes to its Belgium operations (the
Transformation Plan), potentially impacting the jobs of 2 500 Belgian employees in the coming three years, including the
termination of company-operated activities in 14 stores in various locations throughout Belgium. The announcement falls under
the so-called “Law Renault”, that requires that an employer that intends to implement a collective dismissal must first inform and
consult its employees or their representatives before taking any decision on the collective dismissal. The consultation process is
followed by negotiation and implementation phases.
During 2014, the Group reached a protocol agreement with the blue collar work force and signed a preliminary agreement for its
white collars, which was finalized at the beginning of 2015. Delhaize Group recognized a provision of €137 million (of which
€77 million is classified as current) representing management’s best estimate of the expected costs in connection with the
agreed upon voluntary early retirement and voluntary departure of approximately 1 800 employees. Approximately 75% of the
cash outflows will occur over the next three years, with the actual amounts depending on the number of employees choosing for
different options offered.
Since 2009, Delhaize Group’s Romanian operations (Mega Image) have been answering a series of questions sent by the
Romanian Competition Authority to various suppliers and retailers operating in Romania in connection with an ongoing antitrust
investigation. The questionnaires focused on the contractual and commercial relationships between the retailers and local food
suppliers. During 2014, the Group received the Statement of Objections from the Romanian Competition Authority, which alleged
that several retailers (incl. Mega Image) and suppliers were involved in possible competition infringements and recommended to
the Competition Plenum to sanction the companies involved. Delhaize Group responded to the Statement of Objections and
hearings in front of the Competition Plenum took place afterwards.
In 2014, the Romanian Competition Plenum determined that Mega Image, some of its suppliers and other food retailers active in
Romania had in its view infringed Romanian Competition Law through the alleged setting up of anticompetitive vertical
agreements during the period of 2005-2009. Although the fully motivated decision has not been provided to Mega Image so far,
the Competition Plenum has announced its intention to impose Mega Image a fine of 1.05% of the total revenues achieved in
2013. The Group recognized a provision of €5 million in this respect. Mega Image has one month from the notification of the fully
motivated decision to lodge an appeal against the decision and to claim for a suspension of the payment.
Finally, other provisions also increased as a result of higher expected long-term incentives in the U.S.
FINANCIAL STATEMENTS