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TU DISPOSITIVO ES MUY PEQUEÑO,
PRUEBA CON UNO MÁS GRANDE

Logotipo Supermercados Día Memoria Anual 2015
03 Consolidated Annual Accounts 2014

VINotes to the Consolidated Annual Accounts for 2015

(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)

1. Nature, activities and composition of the group

Distribuidora Internacional de Alimentación, S.A. (hereinafter “the Parent” or “DIA”) was incorporated in Spain on 24 June 1996 as a public limited liability company (“sociedad anónima”). Its registered office is located in Las Rozas, Madrid.

The Company’s statutory activity comprises the following activities in Spain and abroad:

  • a) The wholesale or retail sale of food products and any other consumer goods in both domestic and foreign markets.

  • b) Corporate services aimed at the sale of telecommunication products and services, particularly telephony services, through collaboration agreements with suppliers of telephony products and services. These co-operative services shall include the sale of telecommunication products and services, as permitted by applicable legislation.

  • c) Activities related to internet-based marketing and sales, and sales through any other electronic medium of all types of legally tradable products and services, especially food and household products, small electrical appliances, multimedia and IT products, photography equipment and telephony products, sound and image products and all types of services through internet or any other electronic medium.

  • d) Wholesale and retail travel agency activities including the organisation and sale of package tours.

  • e) Retail distribution of petrol, operation of service stations and retail sale of fuel to the public.

  • f) The acquisition, ownership, use, management, administration and disposal of equity instruments of companies domiciled in Spain and abroad through the management of human and material resources.

  • g) The management, coordination, advisory and support of investees and companies with which the Parent works under franchise and similar contracts.

  • h) The deposit and storage of goods and products of all types, both for the Company and for other companies.

Its principal activity is the retail sale of food products through owned or franchised self-service stores under the DIA brand name. The Parent opened its first establishment in Madrid in 1979.

The DIA Group currently trades under the names of DIA Market, DIA Fresh, Fresh by DIA, DIA Maxi, La Plaza de DIA, Max Descuento, Clarel, el Árbol, Cada DIA, Minipreço and Mais Perto.

The Company is the Parent of a group of subsidiaries (hereinafter the DIA Group or the Group) which are all fully consolidated, except for ICDC Services, Sàrl (belonging to DIA World Trade, S.A.), which is equity-accounted.

The following changes to the Group occurred in 2015 and 2014:

  • On 30 November 2015 ICDC Services, Sàrl, was incorporated. The company is domiciled in Geneva and its activity consists of negotiations with international suppliers. This company is 50% owned by the DIA and Casino groups.

  • On 13 July 2015 DBZ Adminstraçao, Gestao de ativos e Serviços Imobiliarios Ltda was incorporated, which is domiciled in Sao Paulo. Its activity is the administration of buildings owned by DIA Brazil.

  • On 1 July 2015 the Parent acquired 100% of the capital of Castanola Investments, S.L. and on 13 July 2015 this company changed its name to DIA ESHOPPING, S.L. Its activity consists of the creation, maintenance and operation of internet web pages and portals for the sale of products and services.

  • On 31 May 2015 the merger of Schlecker Portugal (the absorbee) into DIA Portugal (the absorbing company) was signed, with the transfer en bloc of all the assets and liabilities of Schlecker Portugal to DIA Portugal. With effect from that date Schlecker Portugal was wound up.

  • On 22 May 2015 a corporate group, CINDIA, was created in Portugal by the companies DIA Portugal and ITMP Alimentar. The statutory activity of this corporate group is to improve the terms and conditions applying to the economic activity of its member companies by negotiating on their behalf with the suppliers that work with both companies the terms for the acquisition of the products needed for their respective businesses. The group was incorporated without any own capital, with each company holding a 50% interest in its assets and liabilities. Decisions are subject to unanimous agreement. At 31 December 2015 DIA Portugal has included the corresponding proportion of the assets, liabilities, revenues and expenses in the individual financial statements of DIA Portugal, as permitted by IFRS 11.

  • Distribuidora Internacional, S.A. was incorporated on 21 August 2014 with registered office in Buenos Aires and engages in service consulting.

  • On 2 July 2014 DIA entered into an agreement to purchase 100% of the share capital of Grupo El Árbol Distribución y Supermercados, S.A. (“El Árbol”), which in turn holds a majority interest in Compañía Gallega de Supermercados, S.A. (a 94.24% controlling interest). This transaction was completed on 31 October 2014, the date on which the DIA Group took control. The activity of both companies is the wholesale and retail sale of food (see note 4 (c)).

  • At 31 March 2014 the Group classified the assets and liabilities of DIA France SAS and its subsidiaries, which formed a separate business segment (see note 5), as held for sale based on the agreements adopted by the Parent’s management for the imminent sale of this subgroup. On 30 November 2014 the Group completed the sale of DIA France and thus on that date lost control of the investees in this segment. The Group classified the different accounts of this business in the consolidated income statement as the net gain of discontinued activities in 2014 (see note 15).

  • In 2014 the Group decided to close Beijing DIA Commercial Co. Ltd. At 31 December 2015 the Group has liquidated its net assets and is finalising the local administrative procedures for its dissolution.

Details of the DIA Group’s subsidiaries, as well as their activities, registered offices and percentages of ownership at 31 December 2015 and 2014 are as follows:

Name Location Activity 2015 2014
DIA Portugal Supermercados, Lda. Lisbon Wholesale and retail distribution of food products. 100,00 100,00
DIA Argentina, S.A. Buenos Aires Wholesale and retail distribution of food products. 100,00 100,00
Distribuidora Internacional, S.A. Buenos Aires Services consultancy. 100,00 100,00
DIA Brasil Sociedade Limitada Sao Paulo Wholesale and retail distribution of consumer products. 100,00 100,00
DBZ Serv. Inmobiliario LTDA Sao Paulo Administration of real estate property of DIA Brasil 100,00 -
Finandia, E.F.C., S.A. Madrid Loan and credit transactions, including consumer loans, mortgage loans and finance for commercial transactions, and credit and debit card issuing and management. 100,00 100,00
DIA Tian Tian Management Consulting Service & Co. Ltd. Shanghai Services consultancy. 100,00 100,00
Shanghai DIA Retail Co. Ltd. Shanghai Wholesale and retail distribution of consumer products. 100,00 100,00
Beijing DIA Commercial Co. Ltd. Beijing Wholesale and retail distribution of consumer products. 100,00 100,00
Twins Alimentación, S.A. Madrid Distribution of food and toiletries through supermarkets. 100,00 100,00
Pe-Tra Servicios a la distribución, S.L. Madrid Leasing of business premises. 100,00 100,00
DIA World Trade, S.A. Geneva Provision of services to suppliers of DIA Group companies. 100,00 100,00
Schlecker S.A. Madrid Distribution of cleaning and toiletry products. 100,00 100,00
Schlecker Portugal, Lda. Lisbon Distribution of cleaning and toiletry products. - 100,00
Grupo El Árbol, Distribución y Supermercados, S.A. Madrid Wholesale and retail distribution of food products and others. 100,00 100,00
Compañía Gallega de Supermercados, S.A. Valladolid Wholesale and retail distribution of food products and others. 94,24 94,24
ICDC Services Sàrl Geneva Dealing with international suppliers. 50,00 -
DIA ESHOOPING, S.L. Madrid Creation, maintenance and operation of Internet sites and portals for selling products and services. 100,00 -

2. Basis of presentation

2.1. Basis of preparation of the consolidated annual accounts

The directors of the Parent have prepared these consolidated annual accounts on the basis of the accounting records of Distribuidora Internacional de Alimentación S.A. and consolidated companies and in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS-EU), and other applicable provisions in the financial reporting framework pursuant to Regulation (EC) No. 1606/2002 of the European Parliament and of the Council, to present fairly the consolidated equity and consolidated financial position of Distribuidora Internacional de Alimentación S.A. and subsidiaries at 31 December 2015 and consolidated results of operations and consolidated cash flows and changes in consolidated equity for the year then ended.

On 28 February 2011 the DIA Group authorised for issue the consolidated financial statements for 2010, 2009 and 2008, which were the first consolidated financial statements drawn up by the DIA Group. These consolidated financial statements were prepared in accordance with IFRS 1 First-time Adoption of International Financial Reporting Standards, taking 1 January 2008 as the date of first-time adoption. Until 5 July 2011 the DIA Group formed part of the Carrefour Group, which has issued consolidated financial statements in accordance with IFRS-EU since 2005. For the purposes of the consolidated financial statements of the Carrefour Group, DIA and its subsidiaries each prepared a consolidation reporting package under IFRS-EU.

In accordance with IFRS 1, considering the DIA Group as a subsidiary that adopted IFRS-EU for the first time, the assets and liabilities included in DIA’s opening statement of financial position were recognised at the carrying amounts of the sub-group headed by DIA in the amount reflected in the consolidated financial statements of the Carrefour Group, eliminating its consolidation adjustments.

Consequently, the DIA Group chose the same exemptions from IFRS 1 as those applied by the Carrefour Group:

  • Business combinations: the DIA Group did not re-estimate the business combinations carried out prior to 1 January 2004 (see note 3 (a)).

  • Cumulative translation differences: the DIA Group recognised the cumulative translation differences of all foreign businesses prior to 1 January 2004 at zero, and transferred the related balances to reserves at that date (see note 3 (d)).

  • Financial instruments: the DIA Group opted to apply IAS 32 and IAS 39 from 1 January 2004.

The 2011 consolidated annual accounts, which were the first consolidated annual accounts prepared by the DIA Group, were filed at the Madrid Mercantile Registry in accordance with Spanish legislation.

These consolidated annual accounts have been prepared on a historical cost basis, except for the following:

  • Derivative financial instruments, financial instruments at fair value through profit or loss and available-for-sale financial assets are measured at fair value.

  • Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.

Note 3 includes a summary of all mandatory and significant accounting principles, measurement criteria and alternative options permitted under IFRS.

The Group has opted to present a consolidated income statement separately from the consolidated statement of comprehensive income. The consolidated income statement is reported using the nature of expense method and the consolidated statement of cash flows has been prepared using the indirect method.

The DIA Group’s consolidated annual accounts for 2015 were prepared by the board of directors of the Parent on 23 February 2016 and are expected to be approved in their present form by the shareholders of the Parent at their ordinary general meeting.

2.2. Comparative information

The consolidated statement of financial position, consolidated income statement, consolidated statement of changes in equity, consolidated statement of cash flows and the notes thereto for 2015 include comparative figures for 2014, which formed part of the consolidated annual accounts approved by the shareholders of the Parent at the ordinary general meeting held on 24 April 2015.

Law 3/2004 of 29 December 2004 established measures to combat late payment in commercial transactions. This Law was subsequently amended by additional provision three of Law 15/2010 of 5 July 2010, which was itself amended by final provision two of Law 31/2014, which requires all commercial companies to expressly disclose payment terms to suppliers in the notes to the consolidated annual accounts. As permitted by this Law, in this first year of application of this requirement no comparative information is presented in respect of this obligation (see note 17.3).

2.3. Functional and presentation currency

The figures contained in the documents comprising these consolidated annual accounts are expressed in thousands of Euros, unless stated otherwise. The functional and presentation currency of the Parent is the Euro.

2.4. Relevant accounting estimates, assumptions and judgements used when applying accounting principles

Relevant accounting estimates and judgements and other estimates and assumptions have to be made when applying the Group’s accounting principles to prepare the consolidated annual accounts in conformity with IFRS-EU. A summary of the items requiring a greater degree of judgement or which are more complex, or where the assumptions and estimates made are significant to the preparation of the consolidated annual accounts, is as follows:

a) Relevant accounting estimates and assumptions

The Group evaluates whether there are indications of possible impairment losses on non-financial assets subject to amortisation or depreciation to verify whether the carrying amount of these assets exceeds the recoverable amount (see note 3 (k(ii)). The DIA Group calculates impairment on the basis of the strategic plans of the different cash generating units (CGU), i.e. the stores. The Group tests goodwill for impairment on an annual basis. The calculation of the recoverable amount of each CGU or a group of CGUs to which goodwill has been allocated requires the use of estimates by management (see note 3 (k (i)). The recoverable amount is the higher of fair value less costs to sell and value in use. The Group generally uses cash flow discounting methods to calculate these values. Discounted cash flow calculations are based on five-year projections in the budgets approved by management. The cash flows take into consideration past experience and represent management’s best estimate of future market performance. From the fifth year cash flows are extrapolated using individual growth rates. The key assumptions employed when determining fair value less costs to sell and value in use include growth rates and the weighted average cost of capital. The estimates, including the methodology used, could have a significant impact on values and impairment.

The Group evaluates the recoverability of deferred tax assets that should be recognised by its subsidiaries based on the business plan of the subsidiary in question or, where the case may be, of the tax group to which that subsidiary belongs, and recognises, where appropriate, the tax effect of tax loss carryforwards, credits and deductible temporary differences whose offset against future tax gains appears probable. In order to determine the amount of the deferred tax assets to be recognised, Parent management estimates the amounts and dates on which future taxable profits are expected to materialise and the reversal period of temporary differences.

In 2014 a long-term incentive plan for 2014-2016 to be settled in own shares of the Parent was approved by DIA’s shareholders at their general meeting. Beneficiaries were informed of the plan regulations during December 2014 and January 2015. The Parent has estimated the total obligation derived from the plan and the part of this obligation accrued at 31 December 2015 based on the extent to which the conditions for receipt have been met.

The Group is undergoing legal proceedings and tax inspections in a number of jurisdictions, some of which have been completed by the taxation authorities and additional tax assessments have been appealed by the Group companies at 31 December 2015. The Group recognises a provision if it is probable that an obligation will exist at year end which will give rise to an outflow of resources embodying economic benefits and the outflow can be reliably measured. As a result, management uses significant judgement when determining whether it is probable that the process will result in an outflow of resources and estimating the amount.

2.5. First-time application of accounting standards

The Group has applied all standards effective as of 1 January 2015. The application of these standards has not required any significant changes in the preparation of this year’s consolidated annual accounts.

2.6. Standards and interpretations issued and not applied

At the date of publication of these consolidated annual accounts, the following standards have been issued but have not entered into force. The Group expects to adopt these standards as of 1 January 2018 or thereafter:

  • IFRS 9 Financial instruments. Effective for annual periods beginning on or after 1 January 2018. Pending adoption by the EU.

  • IFRS 15 Revenue from Contracts with Customers. Effective for annual periods beginning on or after 1 January 2018. Pending adoption by the EU.

  • IFRS 16 Leases Effective for annual periods beginning on or after 1 January 2019. Pending adoption by the EU.

The DIA Group is analysing the potential impact of applying these standards and estimates that the impact of applying IFRS 16 will be significant. The Group has no plans for the early adoption of these standards.

2.7. Basis of consolidation

IFRS 10 requires an entity (the parent) that controls one or more other entities (subsidiaries) to present consolidated financial statements and establishes control as the basis for consolidation. An investor, regardless of the nature of its involvement with an entity (the investee), shall determine whether it is a parent by assessing whether it controls the investee. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Thus, an investor controls an investee if and only if the investor has all the following:

  • a) power over the investee;

  • b) exposure, or rights, to variable returns from its involvement with the investee; and

  • c) the ability to use its power over the investee to affect the amount of the investor’s returns.

The income, expenses and cash flows of subsidiaries are included in the consolidated annual accounts from their acquisition date, which is the date control commences. Subsidiaries are excluded from the consolidated Group from the date on which this control is lost. For consolidation purposes the annual accounts of subsidiaries are prepared for the same reporting period as those of the Parent, and applying the same accounting policies. All balances, income and expenses, gains, losses and dividends arising from transactions between Group companies are eliminated in full.

3. Significant accounting policies

a) Business combinations and goodwill

As permitted by IFRS 1, the Group has recognised only business combinations that occurred on or after 1 January 2004, the date of transition of the Carrefour Group to IFRS-EU, using the acquisition method (see note 2.1). Entities acquired prior to that date were recognised in accordance with the accounting principles applied by the Carrefour Group at that time, taking into account the necessary corrections and adjustments at the transition date.

The Group has applied IFRS 3 Business Combinations, revised in 2014, to all such transactions detailed in these consolidated annual accounts.

The Group applies the acquisition method for business combinations. The acquisition date is the date on which the Group obtains control of the acquiree.

The consideration transferred in a business combination is calculated as the sum of the acquisition-date fair values of the assets transferred, the liabilities incurred or assumed, the equity instruments issued and any consideration contingent on future events or compliance with certain conditions in exchange for control of the business acquired.

The consideration transferred excludes any payment that does not form part of the exchange for the acquired business. Acquisition costs are recognised as an expense when incurred.

The excess between the consideration given and the value of net assets acquired and liabilities assumed, is recognised as goodwill. Any shortfall, after evaluating the consideration given and the identification and measurement of net assets acquired, is recognised in profit or loss.

b) Joint arrangements

IFRS 11 establishes that a joint arrangement is an arrangement of which two or more parties have joint control. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

c) Non-controlling interests

Non-controlling interests in subsidiaries acquired prior to 1 January 2004 were recognised at the amount of the Group’s share of the subsidiary’s equity.

Profit and loss and each component of other comprehensive income are allocated to equity attributable to equity holders of the Parent and to non-controlling interests in proportion to their investment, even if this results in the non-controlling interests having a deficit balance. Agreements entered into between the Group and non-controlling interests are recognised as a separate transaction.

Changes in the Group’s percentage ownership of a subsidiary that imply no loss of control are accounted for as equity transactions. When control over a subsidiary is lost, the Group adjusts any residual investment in the entity to fair value at the date on which control is lost.

d) Translation of foreign operations

The Group has applied the exemption permitted by IFRS 1, First-time Adoption of International Financial Reporting Standards, relating to accumulated translation differences. Consequently, translation differences recognised in the consolidated annual accounts generated prior to 1 January 2004 are recognised in retained earnings (see note 2.1). As of that date, foreign operations whose functional currency is not the currency of a hyperinflationary economy have been translated into Euros as follows:

  • Assets and liabilities, including goodwill and net asset adjustments derived from the acquisition of the operations, including comparative amounts, are translated at the closing rate at the reporting date.

  • Capital and reserves are translated using historical exchange rates.

  • Income and expenses, including comparative amounts, are translated at the exchange rates prevailing at each transaction date.

  • All resulting exchange differences are recognised as translation differences in other comprehensive income.

For presentation of the consolidated statement of cash flows, cash flows of the subsidiaries and foreign joint ventures, including comparative balances, are translated into Euros applying the exchange rates prevailing at the transaction date.

Translation differences recognised in other comprehensive income are accounted for in profit or loss as an adjustment to the gain or loss on the sale using the same criteria as for subsidiaries, associates and joint ventures.

e) Foreign currency transactions, balances and cash flows

Transactions in foreign currency are translated at the spot exchange rate prevailing at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies have been translated into Euros at the closing rate, while non-monetary assets and liabilities measured at historical cost have been translated at the exchange rate prevailing at the transaction date. Non-monetary assets measured at fair value have been translated into Euros at the exchange rate at the date that the fair value was determined.

In the consolidated statement of cash flows, cash flows from foreign currency transactions have been translated into Euros at the exchange rates prevailing at the dates the cash flows occur. The effect of exchange rate fluctuations on cash and cash equivalents denominated in foreign currencies is recognised separately in the statement of cash flows as net exchange differences.

Exchange gains and losses arising on the settlement of foreign currency transactions and the translation into Euros of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. However, exchange gains or losses arising on monetary items forming part of the net investment in foreign operations are recognised as translation differences in other comprehensive income.

Exchange gains or losses on monetary financial assets or financial liabilities denominated in foreign currencies are also recognised in profit or loss.

f) Recognition of income and expenses

Income and expenses are recognised in the consolidated income statement on an accruals basis when the actual flow of goods and services they represent takes place, regardless of when the monetary or financial flows derived therefrom arise.

Revenue from the sale of goods or services is measured at the fair value of the consideration received or receivable. Volume rebates, prompt payment and any other discounts, as well as the interest added to the nominal amount of the consideration, are recognised as a reduction in the consideration.

Discounts granted to customers are recognised as a reduction in sales revenue when it is probable that the discount conditions will be met.

The Group has customer loyalty programmes which do not entail credits, as they comprise discounts which are applied when a sale is made and are recognised as a reduction in the corresponding transaction.

The Group recognises revenue from the sale of goods when:

  • It has transferred to the buyer the significant risks and rewards of ownership of the goods;

  • It retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

  • The amount of revenue and the costs incurred or to be incurred can be measured reliably;

  • It is probable that the economic benefits associated with the transaction will flow to the Group; and

  • The costs incurred or to be incurred in respect of the transaction can be measured reliably.

g) Intangible assets

Intangible assets, except for goodwill (see note 3 (a)), are measured at cost or cost of production, less any accumulated amortisation and accumulated impairment.

The Group assesses whether the useful life of each intangible asset is finite or indefinite. Intangible assets with finite useful lives are amortised systematically over their estimated useful lives and their recoverability is analysed when events or changes occur that indicate that the carrying amount might not be recoverable. Intangible assets with indefinite useful lives, including goodwill are not amortised, but are subject to analysis to determine their recoverability on an annual basis, or more frequently if indications exist that their carrying amount may not be fully recoverable. Management reassesses the indefinite useful life of these assets on a yearly basis.

The amortisation methods and periods applied are reviewed at year end and, where applicable, adjusted prospectively.

Internally generated intangible assets

Development expenses, which mainly relate to computer software and industrial property, are capitalised to the extent that:

  • The Group has technical studies that demonstrate the feasibility of the production process.

  • The Group has undertaken a commitment to complete production of the asset, to make it available for sale or internal use.

  • The asset will generate sufficient future economic benefits.

  • The Group has sufficient technical and financial resources to complete development of the asset and has devised budget control and cost accounting systems that enable monitoring of budgetary costs, modifications and the expenditure actually attributable to the different projects.

Expenditure on activities for which costs attributable to the research phase are not clearly distinguishable from costs associated with the development stage of intangible assets are recognised in profit or loss.

Expenditure on activities that contribute to increasing the value of the different businesses in which the Group as a whole operates is recognised as expenses when incurred. Replacements or subsequent costs incurred on intangible assets are generally recognised as an expense, except where they increase the future economic benefits expected to be generated by the assets.

Computer software

Computer software comprises all the programs relating to terminals at points of sale, warehouses and offices, as well as micro-software. Computer software is recognised at cost of acquisition and/or production and is amortised on a straight-line basis over its estimated useful life, usually three years. Computer software maintenance costs are charged as expenses when incurred.

Leaseholds

Leaseholds are rights to lease business premises which have been acquired through an onerous contract assumed by the Group. Leaseholds are measured at cost of acquisition and amortised on a straight-line basis over the shorter of ten years and the estimated term of the lease contract.

Industrial property

Industrial property comprises the trademarks acquired, which are amortised over 10 years, as well as the investment in business diagnostics and product range development, which is amortised over a period of four years.

h) Property, plant and equipment

Property, plant and equipment are measured at cost or cost of production, less any accumulated depreciation and accumulated impairment. Land is not depreciated.

The cost of acquisition includes external costs plus internal costs for materials consumed, which are recognised as income in the income statement. The cost of acquisition includes, where applicable, the initial estimate of the costs required to dismantle or remove the asset and to restore the site on which it is located, when the Group has the obligation to carry out these measures as a result of the use of the asset.

Since the average period to carry out work on warehouses and stores does not exceed twelve months, there are no significant interest and other finance charges that are considered as an increase in property, plant and equipment.

Non-current investments made in buildings leased by the Group under operating lease contracts are recognised following the same criteria as those used for other property, plant and equipment. Assets are depreciated over the shorter of their useful life and the lease term, taking renewals into account.

Enlargement, modernisation or improvement expenses that lead to an increase in productivity, capacity or efficiency or lengthen the useful life of the assets are capitalised as an increase in the cost of the assets when recognition criteria are met.

Repair and maintenance costs are recognised in the consolidated income statement in the year in which they are incurred.

The DIA Group assesses whether valuation adjustments are necessary to recognise each item of property, plant and equipment at its lowest recoverable amount at each year end, when circumstances or changes indicate that the carrying amount of property, plant and equipment may not be fully recoverable, i.e. that the revenues generated will not be sufficient to cover all costs and expenses. In this case, the lowest measurement is not maintained if the reasons for recognising the valuation adjustment have ceased to exist.

Recoverable amount is determined for each individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. If this is the case, recoverable amount is determined for the cash-generating unit (CGU) to which the asset belongs.

The Group companies depreciate their property, plant and equipment from the date on which these assets enter into service. Property, plant and equipment are depreciated by allocating the cost of the assets over the following estimated useful lives, which are calculated in accordance with technical studies, which are reviewed on a regular basis:

Buildings 40
Installations in leased stores 10–20
Technical installations and machinery 3–7
Other installations, equipment and furniture 4 – 10
Other property, plant and equipment 3–5

Estimated residual values and depreciation methods and periods are reviewed at each year end and, where applicable, adjusted prospectively.

i) Leases

Lessee accounting records

Determining whether a contract is, or contains, a lease is based on an analysis of the substance of the arrangement and requires an assessment of whether fulfilment of the arrangement is dependent on the use of a specific asset and whether the arrangement conveys a right to use the asset to the DIA Group.

Leases under which the lessor maintains a significant part of the risks and rewards of ownership are classified as operating leases. Operating lease payments are expensed on a straight-line basis over the lease term.

Leases are classified as finance leases when substantially all the risks and rewards incidental to ownership of the assets are transferred to the Group. At the commencement of the lease term, the Group recognises the assets, classified in accordance with their nature, and the associated debt, at the lower of fair value of the leased asset and the present value of the minimum lease payments agreed. Lease payments are allocated proportionally between the reduction of the principal of the lease debt and the finance charge, so that a constant rate of interest is obtained on the outstanding balance of the liability. Finance charges are recognised in the consolidated income statement over the life of the contract.

Contingent rents are recognised as an expense when it is probable that they will be incurred.

Lessor accounting records

The Group has granted the right to use certain spaces within the DIA stores to concessionaires and the right to use leased establishments to franchisees under contracts. The risks and rewards incidental to ownership are not substantially transferred to third parties under these contracts. Operating lease income is taken to the consolidated income statement on a straight-line basis over the lease term. Assets leased to concessionaires are recognised under property, plant and equipment following the same criteria as for other assets of the same nature.

Sale and leaseback transactions

In each sale and leaseback transaction, the Group assesses the classification of finance and operating lease contracts for land and buildings separately for each item, and assumes that land has an indefinite economic life. To determine whether the risks and rewards incidental to ownership of the land and buildings are substantially transferred, the Group considers the present value of minimum future lease payments and the minimum lease period compared with the economic life of the building.

If the Group cannot reliably allocate the lease rights between the two items, the contract is recognised as a finance lease, unless there is evidence that it is an operating lease.

Transactions that meet the conditions for classification as a finance lease are considered as financing operations and, therefore, the type of asset is not changed and no profit or loss is recognised.

When the leaseback is classed as an operating lease:

  • If the transaction is established at fair value, any profit or loss on the sale is recognised immediately in consolidated profit or loss for the year.

  • If the sale price is below fair value, any profit or loss is recognised immediately. However, if the loss is compensated for by future lease payments at below market price, it is deferred in proportion to the lease payments over the period for which the asset is to be used.

  • If the sale price is above fair value, the excess over fair value is deferred and amortised over the period for which the asset is to be used.

j) Discontinued operations

A discontinued operation is a component of the Group that either has been disposed of, or is classified as held-for-sale, and:

  • represents a separate major line of business or geographical area of operations;

  • is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or

  • is a subsidiary acquired exclusively with a view to resale.

A component of the Group comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the Group.

The Group discloses the post-tax profit and loss of discontinued operations and the post-tax gain or loss recognised on the measurement at fair value less costs to sell or distribute or on the disposal of the assets or disposal group(s) constituting the discontinued operation on the face of the consolidated income statement.

If the Group ceases to classify a component as a discontinued operation, the results previously disclosed as discontinued operations are reclassified to continuing operations for all years presented.

k) Impairment of non-financial assets

(i) Impairment of goodwill

Pursuant to IAS 36, impairment testing should be performed annually on each CGU or group of CGUs with associated goodwill, to determine whether the carrying amount of these assets exceeds their recoverable amount.

The recoverable amount of the assets is the higher of their fair value less costs to sell and their value in use.

This CGU or group of CGUs should represent the lowest level at which goodwill is monitored for internal management purposes and should not be larger than an operating segment before aggregation determined in accordance with IFRS 8. The DIA Group reviews the allocation of goodwill at company and/or country level. This decision is based on both organisational and strategic criteria and on how implementation decisions are taken.

An asset’s value in use is measured based on the future cash flows the Group expects to derive from use of the asset, expectations about possible variations in the amount or timing of those future cash flows, the time value of money, the price for bearing the uncertainty inherent in the asset and other factors that market participants would reflect in pricing the future cash flows associated with the asset.

(ii) Impairment of other non-current assets

At the end of each reporting period, the Group assesses whether there are any indications of possible impairment of non-current assets, including intangible assets. Based on past experience, the Group considers that there are indications of impairment when adjusted EBITDA (taken to mean earnings before depreciation/amortisation and impairment, gains/losses on disposal of fixed assets and other non-recurring income and expense) of a mature store (one that has been in operation for more than two years) have been negative for more than two years. All stores are tested for impairment that have impairment recognised. If such indications exist, or when by their nature assets require yearly impairment testing, the Group estimates the recoverable amount of the asset, calculated as the higher of fair value less costs to sell and value in use. Value in use is determined by discounting estimated future cash flows, applying a pre-tax discount rate which reflects the value of money over time, and considering the specific risks associated with the asset. When the carrying amount of an asset exceeds its estimated recoverable amount, the asset is considered to be impaired. In this case the carrying amount is adjusted to the recoverable amount and the impairment loss is recognised in the consolidated income statement. Amortisation and depreciation charges for future periods are adjusted to the new carrying amount during the remaining useful life of the asset. Assets are tested for impairment on an individual basis, except in the case of assets that generate cash flows that are not independent of those from other assets (cash-generating units).

The Group calculates impairment on the basis of the strategic plans of the different cash generating units to which the assets are allocated, which are generally for a period of five years. For longer periods, projections based on strategic plans are used as of the fifth year, applying a constant expected growth rate. The assumptions on which the projections are based are fundamentally the result of internal estimates taking into account past performance and extrapolating expected performance. For this purpose, factors are considered which are beyond the control of Group management, such as macroeconomic data and GDP growth, consumer spending, population growth, unemployment and inflation. External market research reports and market shares are also consulted.

The discount rates used are calculated before tax and are adjusted for the corresponding country and business risks.

When new events or changes in existing circumstances arise which indicate that an impairment loss recognised in a previous period could have disappeared or been reduced, a new estimate of the recoverable amount of the asset is made. Previously recognised impairment losses are only reversed if the assumptions used in calculating the recoverable amount have changed since the most recent impairment loss was recognised. In this case, the carrying amount of the asset is increased to its new recoverable amount, to the limit of the carrying amount this asset would have had had the impairment loss not been recognised in previous periods. The reversal is recognised in the consolidated income statement and amortisation and depreciation charges for future periods are adjusted to the new carrying amount.

l) Advertising and catalogue expenses

The cost of acquiring advertising material or promotional articles and advertising production costs are recognised as expenses when incurred. However, advertising placement costs that can be identified separately from advertising production costs are accrued and expensed as the advertising is published.

m) Financial instruments – assets

Regular way purchases and sales of financial assets are recognised in the consolidated statement of financial position at the trade date, when the Group undertakes the commitment to purchase or sell the asset. At the date of first recognition, the DIA Group classifies its financial instruments into the following four categories: financial assets at fair value through profit and loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. The only significant financial assets are classified under loans and receivables.

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market and are not classified in any other financial asset categories. Assets of this nature are recognised initially at fair value, including transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Results are recognised in the consolidated income statement at the date of settlement or impairment loss, and through amortisation. Trade receivables are initially recognised at fair value and subsequently adjusted where objective evidence exists that the debtor may default on payment. The provision for bad debts is calculated based on the difference between the carrying amount and the recoverable amount of receivables. Current trade balances are not discounted.

Guarantees paid in relation to rental contracts are measured using the same criteria as for financial assets. The difference between the amount paid and the fair value is classified as a prepayment and recognised in consolidated profit and loss over the lease term.

All or part of a financial asset is derecognised when one of the following circumstances arises:

  • The rights to receive the cash flows associated with the asset have expired.

  • The Group has assumed a contractual obligation to pay the cash flows received from the asset to a third party.

  • The contractual rights to the cash flows from the asset have been transferred to a third party and all of the risks and rewards of ownership have been transferred.

n) Inventories

Inventories are initially measured at cost of purchase based on the weighted average cost method.

The purchase price comprises the amount invoiced by the seller, after deduction of any discounts, rebates, non-trading income or other similar items, plus any additional costs incurred to bring the goods to a saleable condition, other costs directly attributable to the acquisition and indirect taxes not recoverable from the Spanish taxation authorities.

Trade discounts are recognised as a reduction in the cost of inventories when it is probable that the conditions for discounts to be received will be met. Any unallocated discounts are used to reduce the balance of merchandise and other consumables used in the consolidated income statement.

Purchase returns are recognised as a reduction in the carrying amount of inventories returned, except where it is not feasible to identify these items, in which case they are accounted for as a reduction in inventories on a weighted average cost basis.

The previously recognised write-down is reversed against profit and loss when the circumstances that previously caused inventories to be written down no longer exist or when there is clear evidence of an increase in net realisable value because of changed economic circumstances. The reversal of the valuation adjustment is limited to the lower of the cost and the revised net realisable value of the inventories.

Write-downs to net realisable value recognised or reversed on inventories are classified under merchandise and other consumables used.

o) Cash and cash equivalents

Cash and cash equivalents recognised in the consolidated statement of financial position include cash in hand and in bank accounts, demand deposits and other highly liquid investments maturing in less than three months. These items are recognised at historical cost, which does not differ significantly from their realisable value.

For the purpose of the consolidated statement of cash flows, cash and cash equivalents reflect items defined in the paragraph above. Any bank overdrafts are recognised in the consolidated statement of financial position as financial liabilities from loans and borrowings.

p) Financial liabilities

Financial liabilities are initially recognised at the fair value of the consideration given, less any directly attributable transaction costs. In subsequent periods, these financial liabilities are carried at amortised cost using the effective interest method. Financial liabilities are classified as non-current when their maturity exceeds twelve months or the DIA Group has an unconditional right to defer settlement of the liability for at least twelve months after the reporting period.

Financial liabilities are derecognised when the corresponding obligation is settled, cancelled or has expired. When a financial liability is substituted by another with substantially different terms, the Group derecognises the original liability and recognises a new liability, taking the difference in the respective carrying amounts to the consolidated income statement.

The Group considers the terms to be substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10 per cent different from the discounted present value of the remaining cash flows of the original financial liability.

The Group has contracted reverse factoring facilities with various financial institutions to manage payments to suppliers. Trade payables settled under the management of financial institutions are recognised under trade and other payables in the consolidated statement of financial position until they have been settled, repaid or have expired.

The amounts paid by the financial institutions as consideration for the acquisition of invoices or payment documents for the trade payables recorded by the Group is recognised under other income in the consolidated statement of income when the invoices or documents are conveyed.

Guarantees received in sublease contracts are measured at nominal amount, since the effect of discounting is immaterial.

Derivative financial products and hedge accounting

Derivative financial instruments are initially recognised using the same criteria as those described for financial assets and financial liabilities. Derivative financial instruments are classified as current or non-current depending on whether their maturity is less or more than twelve months. Derivative instruments that qualify to be treated as hedging instruments for non-current assets are classified as non-current assets or liabilities, depending on whether their values are positive or negative.

The criteria from recognising gains or losses arising from changes in the fair value of derivatives depend on whether the derivative instrument complies with hedge accounting criteria and, where applicable, on the nature of the hedging relationship.

Changes in the fair value of derivatives that qualify for hedge accounting, have been allocated as cash flow hedges and are highly effective, are recognised in equity. The ineffective portion of the hedging instrument is taken directly to consolidated profit and loss. When the forecast transaction or the firm commitment results in the recognition of a non-financial asset or liability, the gains or losses accumulated in equity are taken to the consolidated income statement during the same period in which the hedging transaction has an impact on net profit and loss.

At the inception of the hedge the Group formally allocates and documents the hedging relationship between the derivative and the hedged item, as well as the objectives and risk management strategies applied on establishing the hedge. This documentation includes the identification of the hedging instrument, the hedged item or transaction and the nature of the hedged risk. The documentation also considers the measures taken to assess the effectiveness of the hedge in terms of covering the exposure to changes in the hedged item, whether with respect to its fair value or attributable cash flows. The effectiveness of the hedge is assessed prospectively and retrospectively, both at the inception of the hedging relationship and systematically over the period of allocation.

Hedge accounting criteria cease to be applied when the hedging instrument expires or is sold, cancelled or settled, or when the hedging relationship no longer complies with the criteria to be accounted for as such, or the instrument is no longer designated as a hedging instrument. In these cases, the accumulated gain or loss on the hedging instrument that has been recognised in equity is not taken to profit or loss until the forecast or committed transaction impacts on the Group’s results. However, if the transaction is no longer considered probable, the accumulated gains or losses recognised in equity are immediately transferred to the consolidated income statement.

The fair value of the Group’s derivatives portfolio reflects estimates based on calculations performed using observable market data and the specific tools used widely among financial institutions to value and manage derivative risk.

q) Parent own shares

The Group’s acquisition of equity instruments of the Parent is recognised separately at cost of acquisition in the consolidated statement of financial position as a reduction in equity, irrespective of the reason for the purchase. Any gains or losses on transactions with own equity instruments are not recognised in consolidated profit and loss.

The subsequent redemption of the Parent instruments entails a capital reduction equivalent to the par value of the shares. Any positive or negative difference between the purchase price and the par value of the shares is debited or credited to reserves.

Transaction costs related to own equity instruments, including issue costs related to a business combination, are accounted for as a reduction in equity, net of any tax effect.

Parent own shares are recognised as a component of consolidated equity at their total cost.

Contracts that oblige the Group to acquire own equity instruments, including non-controlling interests, in cash or through the delivery of a financial asset, are recognised as a financial liability at the fair value of the amount redeemable against reserves. Transaction costs are likewise recognised as a reduction in reserves. Subsequently, the financial liability is measured at amortised cost or at fair value through consolidated profit or loss in line with the redemption conditions. If the Group does not ultimately exercise the contract, the carrying amount of the financial liability is reclassified to reserves.

r) Distributions to shareholders

Dividends, whether in cash or in kind, are recognised as a reduction in equity when approved by the shareholders at their annual general meeting.

s) Employee benefits

Defined benefit plans

The Group includes plans financed through the payment of insurance premiums under defined benefit plans where a legal or constructive obligation exists to directly pay employees the committed benefits when they become payable or to pay further amounts in the event that the insurance company does not pay the employee benefits relating to employee service in the current and prior periods.

Defined benefit liabilities recognised in the consolidated statement of financial position reflect the present value of defined benefit obligations at the reporting date, minus the fair value at that date of plan assets.

In the event that the result of the operations described in the paragraph above is negative, i.e. it results in an asset, the Group measures the resulting asset at the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. Economic benefits are available to the Group when they are realisable at some point during the life of the plan or on settlement of plan liabilities, even when not immediately realisable at the reporting date.

Income or expense related to defined benefit plans is recognised as employee benefits expense and is the sum of the net current service cost and the net interest cost of the net defined benefit asset or liability. Remeasurements of the net defined benefit asset or liability are recognised in other comprehensive income, comprising actuarial gains and losses, return on plan assets and any change in the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability or asset. The costs of managing the plan assets and any tax payable by the plan itself, other than tax included in the actuarial assumptions are deducted when determining the return on plan assets. Any amounts deferred in other comprehensive income are reclassified to retained earnings in reserves during that year.

The Group recognises the past service cost as an expense for the year at the earlier of when the plan amendment or curtailment occurs and when the Group recognises related restructuring costs or termination benefits.

The present value of defined benefit obligations is calculated annually by independent actuaries using the Projected Unit Credit Method. The discount rate of the net defined benefit asset or liability is calculated based on the yield on high quality corporate bonds of a currency and term consistent with the currency and term of the post-employment benefit obligations.

The fair value of plan assets is calculated applying the principles of IFRS 13 Fair Value Measurement. In the event that plan assets include insurance policies that exactly match the amount and timing of some or all of the benefits payable under the plan, the fair value of the insurance policies is equal to the present value of the related obligations.

The Group only offsets an asset relating to one plan against the liability of another plan provided that it has a legally enforceable right to use a surplus in one plan to settle its obligation under the other plan, and when it intends to settle the obligation on a net basis, or to realise the surplus on one plan and settle its obligation under the other plan simultaneously.

Assets and liabilities arising from defined benefit plans are recognised as current or non-current based on the period of realisation of related assets or settlement of related liabilities.

Termination benefits

Termination benefits paid or payable that do not relate to restructuring processes in progress are recognised when the Group is demonstrably committed to terminating the employment of current employees prior to retirement date. The Group is demonstrably committed to terminating the employment of current employees when it has a detailed formal plan and is without realistic possibility of withdrawing or changing the decisions made.

Restructuring-related termination benefits

Restructuring-related termination benefits are recognised when the Group has a constructive obligation, that is, when it has a detailed formal plan for the restructuring and there is valid expectation in those affected that the restructuring will be carried out by starting to implement that plan or announcing its main features to those affected by it.

Employee benefits

The Group recognises the expected cost of short-term employee benefits in the form of accumulating compensated absences when the employees render service that increases their entitlement to future compensated absences. In the case of non-accumulating compensated absences, the expense is recognised when the absences occur.

t) Provisions

Provisions are recognised when the Group has a present obligation (legal or implicit) as a result of a past event, the settlement of which requires an outflow of resources which is probable and can be estimated reliably. If it is virtually certain that some or all of a provisioned amount will be reimbursed by a third party, for example through an insurance contract, an asset is recognised in the consolidated statement of financial position and the related expense is recognised in the consolidated income statement, net of the foreseen reimbursement. If the time effect of money is material, the provision is discounted, recognising the increase in the provision due to the time effect of money as a finance cost.

Provisions for onerous contracts are based on the present value of unavoidable costs, determined as the lower of the contract costs, net of any income that could be generated, and any compensation or penalties payable for non-completion.

u) Share-based payments for goods and services

The Group recognises the goods or services received or acquired in a share-based payment transaction when it obtains the goods or as the services are received. It recognises an increase in equity if the goods or services were received in an equity-settled share-based payment transaction, or a liability with a balancing entry in the income statement or assets if the goods or services were acquired in a cash-settled share-based payment transaction.

The Group recognises equity-settled share-based payment transactions, including capital increases through non-monetary contributions, and the corresponding increase in equity at the fair value of the goods or services received, unless that fair value cannot be reliably estimated, in which case the value is determined by reference to the fair value of the equity instruments granted.

Equity instruments granted as consideration for services rendered by Group employees or third parties that supply similar services are measured by reference to the fair value of the equity instruments offered.

(i) Equity-settled share-based payment transactions

Share-based payment transactions are recognised as follows:

  • If the equity instruments granted vest immediately on the grant date, the services received are recognised in full, with a corresponding increase in equity;

  • If the equity instruments granted do not vest until the employees complete a specified period of service, those services are accounted for during the vesting period, with a corresponding increase in equity.

The Group determines the fair value of the instruments granted to employees at the grant date.

If the service period is prior to the plan award date, the Group estimates the fair value of the consideration payable, to be reviewed on the plan award date itself.

Market vesting conditions and non-vesting conditions are taken into account when estimating the fair value of the instrument. Vesting conditions, other than market conditions, are taken into account by adjusting the number of equity instruments included in the measurement of the transaction amount so that, ultimately, the amount recognised for services received is based on the number of equity instruments that eventually vest. Consequently, the Group recognises the amount for the services received during the vesting period based on the best available estimate of the number of equity instruments expected to vest and revises that estimate if subsequent information indicates that the number of equity instruments expected to vest differs from previous estimates.

Once the services received and the corresponding increase in equity have been recognised, no additional adjustments are made to equity after the vesting date, although any necessary reclassifications in equity may be made.

(ii) Tax effect

In accordance with prevailing tax legislation in Spain and other countries in which the Group operates, costs settled through the delivery of share-based instruments are deductible in the tax period in which delivery takes place, in which case a temporary difference arises as a result of the time difference between the accounting recognition of the expense and its tax-deductibility.

v) Grants, donations and bequests

Grants, donations and bequests are recorded as a liability when, where applicable, they have been officially awarded and the conditions attached to them have been met or there is reasonable assurance that they will be received.

Monetary grants, donations and bequests are measured at the fair value of the sum received, whilst non-monetary grants, donations and bequests received are accounted for at fair value.

In subsequent years, grants, donations and bequests are recognised as income as they are applied.

Capital grants are recognised as income over the same period and in the proportions in which depreciation on those assets is charged or when the assets are disposed of, derecognised or impaired.

w) Income taxes

Income tax in the consolidated income statement comprises total debits or credits deriving from income tax paid by Spanish Group companies and those of a similar nature of foreign entities.

The income tax expense for each year comprises current tax and, where applicable, deferred tax.

Current tax assets or liabilities are measured at the amount expected to be paid to or recovered from the taxation authorities. The tax rates and tax laws used to calculate these amounts are those prevailing at the closing date in each country.

Deferred tax liabilities are the amounts of income taxes payable in future periods in respect of taxable temporary differences. Deferred tax assets are the amounts of income taxes recoverable in future periods in respect of deductible temporary differences, the carryforward of unused tax losses and the carryforward of unused tax credits. Temporary differences are differences between the carrying amount of an asset or liability and its tax base.

The Group calculates deferred tax assets and liabilities using the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted (or substantially enacted) by the end of the reporting period.

Deferred tax assets and liabilities are not discounted at present value and are classified as non-current irrespective of the reversal date.

At each close the Group analyses the carrying amount of the deferred tax assets recognised and makes the necessary adjustments where doubts exist regarding their future recovery. Deferred tax assets not recognised in the consolidated statement of financial position are also re-evaluated at each accounting close and are recognised when their recovery through future tax profits appears likely, as specified in note 2.4 (a).

The tax effect of items recognised in equity is also recognised directly in equity. The recognition of deferred tax assets and liabilities arising from business combinations affects goodwill.

Deferred tax assets and liabilities are presented at their net amount only when they relate to income taxes levied by the same taxation authority on the same taxable entity, provided that there is a legally enforced right to set off current taxes against assets and liabilities or the intention to realise the assets and settle the liabilities simultaneously.

x) Segment reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the Group’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

y) Classification of assets and liabilities as current and non-current

The Group classifies assets and liabilities in the consolidated statement of financial position as current and non-current. Current assets and liabilities are determined as follows:

  • Assets are classified as current when they are expected to be realised or are intended for sale or consumption in the Group’s normal operating cycle, they are held primarily for the purpose of trading, they are expected to be realised within twelve months after the reporting date or are cash or a cash equivalent, unless the assets may not be exchanged or used to settle a liability for at least twelve months after the reporting date.

  • Liabilities are classified as current when they are expected to be settled in the Group’s normal operating cycle, they are held primarily for the purpose of trading, they are due to be settled within twelve months after the reporting date or the Group does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

z) Environmental issues

The Group takes measures to prevent, reduce or repair the damage caused to the environment by its activities.

Expenses derived from environmental activities are recognised as other operating expenses in the period in which they are incurred. The Group recognises environmental provisions if necessary.

aa) Related party transactions

Sales to and purchases from related parties take place in the same conditions as those existing in transactions between independent parties.

ab) Interest

Interest is recognised using the effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash flows through the expected life of a financial instrument to the net carrying amount of that financial instrument based on the contractual terms of the instrument and not considering future credit losses.

4. Business combinations

a) Acquisition of Eroski Group stores

On 4 November 2014 the Company entered into a framework agreement with Cecosa Supermercados, S.L.; Supermercados Picabo, S.L. and Caprabo, S.A., entities belonging to the Eroski Group, for the sale and purchase of the assets of a maximum of 160 supermarkets that operated under the commercial names Eroski Center, Eroski City and Caprabo, (hereinafter “the Transaction”). At 2014 year end, completion of the Transaction was subject to authorisation being obtained from the competition authorities, as well as compliance with other terms and conditions usually applicable to this type of acquisition. The agreed maximum price was Euros 146 million and was subject to potential adjustments, depending on the number of establishments finally acquired.

On 9 April 2015 the National Markets and Competition Commission approved the Transaction subject solely to DIA”s assumption of several commitments, previously proposed by DIA, related to the obligation to divest three stores, two of which are owned by the Eroski Group and one by the DIA Group. The Parent agreed to assume these commitments. On 17 April 2015 the closing document was signed, which established an initial transaction scope of 144 establishments at a price of Euros 135,348 thousand, the effective acquisition of which took place gradually over the following four months. On 28 July 2015 the conveyance of these 144 establishments was completed and on 7 August 2015 an addendum was signed to the framework agreement whereby the transaction scope was finally confirmed at 147 establishments for a total price of Euros 140,548 thousand.

At 31 December 2015 the DIA Group has paid a total of Euros 140,548 thousand for the transfer of 147 establishments. Stores were conveyed on a weekly basis by each of the selling companies to the two DIA Group companies acquiring them, namely the Parent and Grupo El Árbol, Distribución y Supermercados, S.A. The difference between the price paid by each of the acquiring companies at the time of receiving each establishment and the fair value of the identifiable net assets acquired (land amounting to Euros 11,578 thousand, buildings amounting to Euros 12,921 thousand, and technical installations and machinery amounting to Euros 21,805 thousand) has been recognised as goodwill totalling Euros 94,244 thousand (see note 7.1).

Had the business combination taken place on 1 January 2015, the Group’s revenue and profit for the year attributable to equity holders of the Parent would have increased by Euros 177,800 thousand and decreased by Euros 2,400 thousand, respectively.

b) Acquisition of a business from Mobile Dreams Factory Marketing, S.L.

In July 2015 the Group acquired the assets of Mobile Dreams Factory Marketing, S.L. related to the sale of goods over the internet for a fixed price of Euros 750 thousand and a variable amount, up to a maximum of Euros 2,313 thousand, dependent on sales for the period from 1 July 2015 to 30 June 2017. At the time of the acquisition an independent expert valued the variable price at Euros 1,755 thousand and at the reporting date of these annual accounts at Euros 1,890 thousand. This contingent consideration is recognised under non-current provisions in other provisions (see note 18.2 Other Provisions).

Details of the consideration given, the fair value of the net assets acquired and the goodwill on this business combination are as follows:

Thousands of Euros 2015
Price agreed 2.505
Value of the net assets adquired 331
Goodwill (Excess of net assets acquired over the
acquisition cost) (note 7.1) 2.174

Had the business combination taken place on 1 January 2015, the Group’s revenue and profit for the year attributable to equity holders of the Parent would have increased by Euros 1,031 thousand and decreased by Euros 203 thousand, respectively.

c) Acquisition of the El Árbol Group

On 2 July 2014 the Parent entered into an agreement whereby the Group committed to purchasing 100% of the share capital of Grupo El Árbol Distribución y Supermercados, S.A. (“El Árbol”) and, indirectly, its subsidiary Compañía Gallega de Supermercados, S.A. (El Árbol held a 94.24% controlling interest), as well as the participating loan extended to most of El Árbol’s shareholders (the “Transaction”). Once authorisation had been obtained from the Spanish competition authorities, the final sale and purchase contract was signed on 31 October 2014, which is, therefore, the date on which the Group took control of the acquired businesses (see note 1). The price paid by the DIA Group for all the share capital of El Árbol as well as for the participating loan amounted to a fixed amount of Euros 21,000 thousand and a variable price linked to El Árbol’s revenues from 2015-2018, both inclusive, which at the reporting date of the consolidated annual accounts at 31 December 2014 was valued by an independent expert at Euros 15,989 thousand. During 2015 the parties agreed to lower the variable price by indexing it to a loan of Euros 21,400 thousand, resulting in adjustments of Euros 2,727 thousand. Consequently, the contingent consideration has been valued at Euros 13,262 thousand. At the reporting date of these annual accounts the contingent consideration was adjusted based on the valuation of an independent expert (see note 18.2 Other Provisions).

This acquiree generated consolidated revenues of Euros 120,597 thousand and a consolidated loss of Euros 5,931 thousand for the Group between the acquisition date, 31 October 2014, and the 2014 reporting date. Had the acquisition taken place on 1 January 2014, the Group’s revenue and profit for the year attributable to equity holders of the Parent would have increased by Euros 597,574 thousand and decreased by Euros 77,499 thousand, respectively.

Details of the consideration given, the fair value of the net assets acquired and the goodwill arising on the El Árbol business combination, as mentioned in the first paragraph, have varied between the amounts presented in the annual accounts for 2014 and for 2015 and are as follows:

Thousands of Euros 2015 2014
Price agreed 34.262 36.989
Value of the net assets adquired (120.850) (120.850)
Goodwill (Excess of net assets acquired over the
acquisition cost) (note 7.1) 155.112 157.839

The price paid includes the acquiree’s debt with its former shareholder at the acquisition date, which has been assumed by the Group.

The carrying amount of the assets and liabilities acquired from the El Árbol Group at 31 October 2014, excluding the Euros 46,198 thousand of goodwill recognised that was added to the total amount of goodwill, totalled a negative amount of Euros 173,015 thousand. The adjustments that were required to bring their carrying amount into line with their fair value amounted to a negative Euros 293 thousand, net of their tax effect. The aforementioned value of the assets and liabilities included a participating loan, the nominal value and accrued interest of which amounted to Euros 52,458 thousand at 31 October 2014. This amount was not included in the net assets presented in the consolidated annual accounts of the DIA Group at 31 December 2014 because it was an intragroup loan.

Details of the estimated fair value at 31 December 2014 of the assets, liabilities and contingent liabilities acquired in the El Árbol business combination are as follows:

Thousands of Euros 2014
Property, plant and equipment 71.299
Other intangible assets 3.854
Non-current financial assets 5.243
Deferred tax assets 1.273
Non-current assets 81.669
Inventories 54.200
Trade and other receivables 8.163
Current tax assets 404
Other current financial assets 1.139
Other assets 30
Cash and cash equivalents 6.464
Current assets 70.400
TOTAL ASSETS 152.069
Non-controlling interests (41)
Total Equity (41)
Non-current borrowings 14.933
Provisions 4.481
Deferred tax liabilities 1.147
Non-current liabilities 20.561
Deuda financiera corriente 34.280
Trade and other payables 190.184
Current tax liabilities 15.577
Other financial liabilities 12.358
Current liabilities 252.399
TOTAL LIABILITIES 272.919
TOTAL NET ASSETS (120.850)

At 31 December 2014 the Group recognised Euros 157,839 thousand as provisional goodwill because it did not fulfil the conditions for recognition as a separate asset and reflected the future economic benefits expected to flow to the Group as a result of extending its commercial offer – in a “neighbourhood” format with more competitiveness in purchases and a larger number of points of sale. At 31 December 2015, due to the new agreement described previously, the definitive amount of goodwill has been adjusted to Euros 155,112 thousand. This goodwill is not tax-deductible.

5. Information on operating segments

For management purposes the Group is organised into business units, based on the countries in which it operates, and has two reporting segments:

  • Iberia (Spain, Portugal and Switzerland).

  • Emerging Countries (Brazil, Argentina and China).

Following the sale of the sub-group headed by DIA France on 30 November 2014, the operating segment of France ceased to be part of the DIA Group.

Management monitors the operating results of its business units separately in order to make decisions on resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss and is measured consistently with operating profit or loss in the consolidated financial statements. However, Group financing (including finance costs and finance income) and income taxes are managed on a Group basis and are not allocated to operating segments.

Transfer prices between operating segments are on an arm’s length basis similar to transactions with third parties.

Details of the key indicators expressed by segment are as follows:

Segment–Iberia - Segment–Emerging - Consolidated
Thousands of Euros at 31st December 2015
Sales (1) 5.754.673 - 3.170.781 8.925.454
EBITDA (2) 414.462 - 97.059 511.521
% of sales 7,2% - 3,1% 5,7%
Non-current assets 1.933.945 - 421.157 2.355.102
Liabilities 2.457.796 - 671.608 3.129.404
Acquisition of non-current assets 381.996 - 181.255 563.251
Number of outlets (4) 5.562 - 2.156 7.718
Segment–Iberia - Segment–France- Segment–Emerging - Consolidated
Thousands of Euros at 31st December 2014
Sales (1) 5.221.558 - 2.789.409 8.010.967
EBITDA (2) 443.883 - 81.711 525.594
% of sales 8,5% - 2,9% 6,6%
Non-current assets 1.588.409 - 408.571 1.996.980
Assets held for sale (3) - - 10 10
Liabilities 2.082.091 - 667.326 2.749.417
Liabilities associated with assets held for sale (3) - - 96 96
Acquisition of non-current assets 200.447 4.527 144.434 349.408
Number of outlets (4) 5.415 - 1.891 7.306

(1)Sales eliminations arising from consolidation are included in segment Iberia
(2) EBITDA = operating income before depreciation, amortisation and impairment of tangible and intangible assets, profit/(loss) on changes in fixed assets.
(3) Data related to Beijing DIA Commercial Co. Ltd. is included in the segment Emerging
(4) Number of stores at the closing date.

Details of revenues and non-current assets (except for financial assets and deferred tax assets), by country, are as follows:

Sales Tangible and intangible assets
Thousands of Euros 2015 2014 2015 2014
Spain 5.076.646 4.496.878 1.327.307 1.138.194
Portugal 678.027 724.680 267.628 263.126
Argentina 1.532.301 1.096.027 144.990 136.283
Brazil 1.435.627 1.523.741 203.960 214.200
China 202.853 169.641 20.918 15.643
Switzerland - - 33 119
Total 8.925.454 8.010.967 1.964.836 1.767.565

6. Property, plant and equipment

Details of property, plant and equipment and movements are as follows:

Thousands of Euros Land Buildings Equipment, fixtures and fittings and machinery Other installations, utensils and furniture Tangible assets in progress and advances given Other fixed assets Total
Cost
At 1st January 2014 186.735 1.271.665 1.735.604 98.124 50.778 121.725 3.464.631
Additions 6.499 83.812 167.694 15.481 59.855 8.533 341.874
Disposals - (13.926) (35.285) (6.658) (658) (3.653) (60.180)
Reversal - - (1.539) - - - (1.539)
Transfers 36 34.816 21.338 2.097 (63.261) 3.035 (1.939)
Additions to the consolidated group 1.180 3.002 66.977 22 107 11 71.299
Exits from consolidation perimeter (54.536) (269.644) (668.745) - (1.654) - (994.579)
Other movements - (13) (149) (19) (132) 16 (297)
Translation differences (734) (8.101) (8.851) 519 (512) (154) (17.833)
At 31st December 2014 139.180 1.101.611 1.277.044 109.566 44.523 129.513 2.801.437
Additions 845 67.372 159.987 22.422 149.722 8.461 408.809
Disposals (158) (24.273) (39.412) (9.807) (74) (6.415) (80.139)
Transfers (13) 93.843 1.502 7.100 (101.006) 9.785 11.211
Additions to the consolidated group 11.578 12.921 21.805 3 - - 46.307
Other movements - 14.197 (16.475) (20) (188) (8) (2.494)
Translation differences (4.593) (65.352) (51.923) (19.904) (15.755) (9.208) (166.735)
At 31st December 2015 146.839 1.200.319 1.352.528 109.360 77.222 132.128 3.018.396
Depreciation
At 1st January 2014 - (570.975) (1.119.062) (46.626) - (99.940) (1.836.603)
Amortisation and depreciation (note 21.5) - (46.696) (109.134) (11.282) - (10.633) (177.745)
Disposals - 8.279 27.148 6.525 - 3.573 45.525
Transfers - (138) 1.210 6 - 4 1.082
Exits from consolidation perimeter - 70.314 375.104 - - - 445.418
Other movements - (2.179) 262 21 - 3 (1.893)
Translation differences - 1.299 3.199 (343) - 46 4.201
At 31st December 2014 - (540.096) (821.273) (51.699) - (106.947) (1.520.015)
Amortisation and depreciation (note 21.5) - (58.398) (122.243) (12.998) - (11.525) (205.164)
Disposals - 19.030 30.178 8.402 - 6.160 63.770
Transfers - (1.184) (4.733) (788) - (4.747) (11.452)
Other movements - (8.324) 10.833 (34) - 7 2.482
Translation differences - 9.478 21.546 6.504 - 6.528 44.056
At 31st December 2015 - (579.494) (885.692) (50.613) - (110.524) (1.626.323)
Impairment
At 1st January 2014 (271) (11.473) (14.633) - - - (26.377)
Allowance (note 21.5) (341) (4.317) (2.026) - - - (6.684)
Distribution - 868 764 - - - 1.632
Reversals (note 21.5) - 878 243 - - - 1.121
Other movements - - (3) - - - (3)
Transfers - 217 579 - - - 796
Exits from consolidation perimeter - 5.449 12.972 - - - 18.421
Translation differences - 45 (17) - - - 28
At 31st December 2014 (612) (8.333) (2.121) - - - (11.066)
Allowance (note 21.5) - (8.248) (3.844) (11) - (3) (12.106)
Distribution - 1.245 279 - - - 1.524
Reversals (note 21.5) - 569 756 2 - - 1.327
Other movements - (165) 163 - - - (2)
Transfers - (3) 47 (23) - - 21
Translation differences - 224 15 - - - 239
At 31st December 2015 (612) (14.711) (4.705) (32) - (3) (20.063)
Net carrying amount
At 31st December 2015 146.227 606.114 462.131 58.715 77.222 21.601 1.372.010
At 31st December 2014 138.568 553.182 453.650 57.867 44.523 22.566 1.270.356

Additions in Spain in 2015 include Euros 243,436 thousand (Euros 154,592 thousand at 31 December 2014) that were the result of the acquisition and refurbishment of the former Eroski Group establishments (see note 4). Ninety-nine of these stores were converted to a new format «La Plaza de DIA» and the remainder were converted to other DIA formats. Also new establishments have been opened. All of these new openings, those coming from the Eroski Group and the others, have led to total investments of Euros 115,263 thousand. Also, an investment of Euros 73,626 thousand has been made in changing store formats in Spain and the remaining investment in Spain was due to improvements and refurbishment work carried out in existing stores. Euros 32,061 thousand of the investments in Portugal in 2015 were due to store openings, format changes and improvements. The adaptation of stores to the new DIA Group formats was the most significant of these investments (Euros 39,200 thousand at 31 December 2014, of which Euros 21,766 thousand was due to the purchase of the Torres Novas warehouse). As in the preceding year, additions in the emerging countries in 2015 were primarily due to opening new establishments and adapting existing ones to the new Group formats. In Brazil these investments amounted to Euros 76,906 thousand (Euros 72,586 thousand at 31 December 2014) and in Argentina to Euros 92,532 thousand (Euros 65,025 thousand at 31 December 2014).

Disposals for 2015 and 2014 primarily comprise items replaced as a result of these improvements and disposals due to store closures. Assets with a total carrying amount of Euros 7,526 thousand were derecognised in Spain in 2015 (Euros 6,161 thousand at 31 December 2014). Other disposals for 2015 and 2014 are related to the adaptation of stores in other countries in which the DIA Group operates.

The Group has written down the assets of certain CGUs to their value in use, with a net impact in Spain of Euros 7,404 thousand in 2015 and Euros 4,635 thousand in 2014.

Details of the cost of fully depreciated property, plant and equipment in use at 31 December are as follows:

Thousands of Euros 2015 2014
Buildings 264.217 226.386
Equipment, fixtures and fittings and machinery 572.999 480.029
Other installations, utensils and furniture 18.483 17.130
Other fixed assets 85.959 85.514
Total 941.658 809.059

Buildings include the amount of the Seville warehouse of Twins Alimentación S.A., which is subject to a financing arrangement. Furthermore, as a result of Schlecker’s incorporation into the scope of consolidation in 2013, the Group has assumed three new mortgage loans secured on three warehouses in Tarragona, Zaragoza and Cuenca (see note 17.1).

The Group has taken out insurance policies to cover the risk of damage to its property, plant and equipment. The coverage of these policies is considered sufficient.

Finance leases

Finance leases have been arranged for the stores at which the Group’s principal activities are carried out. There are also finance leases for technical installations, machinery and other fixed assets.

The Group has acquired the following items of property, plant and equipment under finance leases:

Thousands of Euros 2015 2014
Land 115 115
Cost 115 115
Buildings 316 328
Cost 344 344
Accumulated depreciation (28) (16)
Equipment, fixtures and fittings and machinery 26.652 19.304
Cost 40.403 27.706
Accumulated depreciation (13.751) (8.402)
Other installations, utensils and furniture 3 -
Cost 4 -
Accumulated depreciation (1) -
Net carrying amount 27.086 19.747

The main variation in the contracts of this nature from 2014 to 2015 in technical installations, machinery and other fixed assets is due primarily to the finance lease agreements arranged by El Árbol, the Parent, Schlecker, S.A. and Shanghai DIA Retail Co. Ltd.

Interest incurred on finance leases totalled Euros 1,589 thousand in 2015 and Euros 1,054 thousand in 2014 (see note 21.7).

Future minimum lease payments under finance leases, together with the present value of the net minimum lease payments, are as follows:

2015 2014
Thousands of Euros Minimum payments Present value Minimum payments Present value
Less than one year 9.312 7.736 7.002 5.912
Two to five years 21.947 18.191 14.714 12.161
More than 5 years 1.196 994 895 730
Total minimum payments and present value 32.455 26.921 22.611 18.803
Less current portion (note 17.1) (9.312) (7.736) (7.002) (5.912)
Total non-current (note 17.1) 23.143 19.185 15.609 12.891

Future minimum lease payments are reconciled with their present value as follows:

Thousands of Euros 2015 2014
Minimum future payments 32.432 22.578
Purchase option 23 33
Unaccrued finance expenses (5.534) (3.808)
Present value 26.921 18.803

7. Intangible assets

7.1. Goodwill

Details of goodwill by operating segment before aggregation and movement during the period are as follows:

Thousands of Euros SPAIN FRANCE PORTUGAL TOTAL
Net goodwill at 01/01/2014 267.075 147.559 39.754 454.388
Disposals - (1.022) - (1.022)
Provision for impairment (note 21.5) (26) - - (26)
Additions to the consolidated group 157.839 - - 157.839
Exits from consolidation perimeter (note 15) - (146.537) - (146.537)
Net goodwill at 31/12/2014 424.888 - 39.754 464.642
Additions to the consolidated group 93.695 - - 93.695
Disposals (274) - - (274)
Net goodwill at 31/12/2015 518.309 - 39.754 558.063

The goodwill reported by the Group primarily relates to the following business combinations:

  • In 2015 goodwill in Spain has increased by Euros 94,244 thousand due to the acquisition of the Eroski Group stores (see note 4). Also in 2015 after the acquisition of the assets of Mobile Dreams Factory Marketing, S.L (see note 4) goodwill rose by Euros 2,174 thousand. In 2014, goodwill rose by Euros 157,839 thousand due to the acquisition of El Árbol at 31 October 2014. In 2015, as mentioned in note 4, after an adjustment of Euros 2,727 thousand in the acquisition price the related goodwill was also adjusted to Euros 155,112 thousand. Goodwill generated in prior years mainly reflects the business combinations arising from the acquisition of Plus Supermercados S.A. for Euros 160,553 thousand in 2007, the acquisition of Distribuciones Reus, S.A. for Euros 26,480 thousand in 1991 and the acquisition of Schlecker for Euros 48,591 thousand in 2013. Also, in Spain additional goodwill has been generated in the past as a result of the various acquisitions of stores and groups of stores.

  • Goodwill generated in France primarily related to the business combinations resulting from the acquisition of Penny Market, S.A in 2005 for Euros 67,948 thousand by DIA France, and Euros 3,501 thousand in respect of another company called Inmmobiliere Erteco, SAS, arising from the acquisition of the company Sonnenglut/Treff Marché in 2003 for Euros 10,510 thousand. After France’s exit from the DIA Group on 30 November 2014, all the related goodwill was derecognised.

  • In Portugal, goodwill was generated on the business combination arising from the acquisition of Companhia Portuguesa de Lojas de Desconto, S.A. in 1998.

For impairment testing purposes, goodwill has been allocated to DIA’s cash-generating units up to country level.

The recoverable amount of a group of CGUs is determined based on its value in use. These calculations are based on cash flow projections from the financial budgets approved by management over a period of five years. Cash flows beyond this five-year period are extrapolated using the estimated growth rates indicated below. The growth rate should not exceed the average long-term growth rate for the distribution business in which the Group operates.

The following main assumptions are used to calculate value in use:

Spain Portugal
2015 2014 2015 2014
Sales growth rate (1) 3,00% 6,50% 4,90% 3,40%
Growth rate (2) 2,00% 2,00% 2,00% 2,00%
Discount rate (3) 6,88% 7,41% 7,49% 8,24%

(1) Weighted average annual growth rate of sales for the five-year projected period
(2) Weighted average growth rate used to extrapolate cash flows beyond the budgeted period
(3) Discount rate before tax applied to cash flow projections

The decline in the average growth rate for sales in Spain compared with the prior year is primarily because the sales projections of El Árbol were taken into account in the 2014 projections.

These assumptions have been used to analyse each group of CGUs within the business segment.

The Group determines budgeted weighted average sales growth based on estimated future performance and market forecasts.

Group management considers that the average weighted growth rates for sales over the next five years are consistent with past performance, taking into account expansion plans, store refits to new formats and trends in macroeconomic indicators (population, inflation in food prices, etc.).

According to the assumptions used to forecast cash flows, the gross margin will remain stable throughout the budgeted period.

The weighted average growth rates of cash flows in perpetuity are consistent with the forecasts included in industry reports. The discount rates used are pre-tax values calculated by weighting the cost of equity against the cost of debt using the average industry weighting. The cost of equity in each country is calculated considering the following factors: the risk-free rate of the country, the industry Beta, the market risk differential and the size of the company.

In all cases sensitivity analyses are performed in relation to the discount rate used and the growth rate of cash flows in perpetuity to ensure that reasonable changes in these assumptions would not have an impact on the possible recovery of the goodwill recognised. Specifically, a variation of 200 basis points in the discount rate used, a 0% growth rate of income in perpetuity, a 20bp fall in the EBITDA margin or a 1% reduction in the average growth rate of sales, would not result in the impairment of any of the goodwill recognised, except that of the El Árbol Group.

For all the other countries, the following assumptions are used to calculate value in use of property, plant and equipment and intangible assets:

Argentina Brazil
2015 2014 2015 2014
Growth rate (2) 2,00% 2,00% 2,00% 2,00%
Discount rate (3) 12,20% 12,60% 8,56% 8,09%
China
2015 2014
Growth rate (2) 2,00% 2,00%
Discount rate (3) 7,25% 7,20%

7.2. Other intangible assets

Details of other intangible assets and movements are as follows:

Thousands of Euros Development cost Industrial property Leaseholds Computer software Other intangible assets Total
Cost
At 1st January 2014 5.112 3.624 41.627 37.416 14.406 102.185
Additions/Internal development 5.212 - - 1.939 383 7.534
Disposals (2) - (730) (6.100) (198) (7.030)
Transfers (2.950) 1.628 - 1.372 11 61
Additions to the consolidated group - - 1.267 1.289 1.298 3.854
Exists from consolidation perimeter (1.207) - (14.673) (9.487) - (25.367)
Other movements (1.032) - - - - (1.032)
Translation differences - - - (44) (37) (81)
At 31st December 2014 5.133 5.252 27.491 26.385 15.863 80.124
Additions/Internal development 5.410 40 - 5.810 128 11.388
Disposals - - (389) (25) (106) (520)
Transfers (5.725) 3.311 - 2.522 82 190
Additions to the consolidated group - - - 328 - 328
Other movements - (407) - - (8) (415)
Translation differences - - - (836) (409) (1.245)
At 31st December 2015 4.818 8.196 27.102 34.184 15.550 89.850
Depreciation
At 1st January 2014 - (1.206) (20.769) (28.039) (4.587) (54.601)
Amortisation and depreciation (note 21.5) - (702) (956) (4.746) (455) (6.859)
Disposals - - 386 6.100 - 6.486
Exists from consolidation perimeter - - 318 7.607 - 7.925
Other movements - - - (280) - (280)
Translation differences - - - 43 15 58
At 31st December 2014 - (1.908) (21.021) (19.315) (5.027) (47.271)
Amortisation and depreciation (note 21.5) - (1.396) (1.143) (5.814) (509) (8.862)
Disposals - - 318 25 - 343
Transfers - - (34) - 64 30
Other movements - 407 1 (1) 8 415
Translation differences - - - 496 156 652
At 31st December 2015 - (2.897) (21.879) (24.609) (5.308) (54.693)
Impairment
At 1st January 2014 - - (1.647) - (324) (1.971)
Allowance (note 21.5) - - - - (45) (45)
Distribution - - 133 - - 133
Reversals (note 21.5) - - - - 109 109
Transfers - - (17) - 17 -
Exits from consolidation perimeter - - 1.483 - - 1.483
Translation differences - - - - 5 5
At 31st December 2014 - - (48) - (238) (286)
Allowance (note 21.5) - - (76) - (324) (400)
Distribution - - 73 - 30 103
Reversal (note 21.5) - - - - 166 166
Translation differences - - - - 23 23
At 31st December 2015 - - (51) - (343) (394)
Net carrying amount
At 31st December 2015 4.818 5.299 5.172 9.575 9.899 34.763
At 31st December 2014 5.133 3.344 6.422 7.070 10.598 32.567

Additions to development costs in 2015 reflect the IT projects developed internally in Spain amounting to Euros 3,426 thousand (Euros 5,212 thousand at 31 December 2014) and the Euros 1,984 investment in business diagnostics and product range development. The Group also acquired computer software in Spain for Euros 4,498 thousand in 2015 (Euros 1,049 thousand at 31 December 2014). Additions in and transfers to industrial property comprise the investment in business diagnostics and product range development.

As indicated in note 7.1, in 2015 and 2014 the DIA Group has recognised impairment losses on its intangible assets. These impairment losses have been included in the income statement under amortisation, depreciation and impairment (see note 21.5).

 Details of fully amortised intangible assets at each year end are as follows:

Thousands of Euros 2015 2014
Computer software 15.848 13.968
Leaseholds and other 6.779 5.786
Total 22.627 19.754

8. Operating leases

The Group has leased certain assets under operating leases from third parties.

The main operating leases are linked to some of its warehouses and the business premises where the Group carries out its principal activity.

Details of the main operating lease contracts in force at 31 December 2015 are as follows:

Warehouse Country Minimum lease period Warehouse Country Minimum lease period
Getafe SPAIN 2.017 Azuqueca SPAIN 2.018
Mallén SPAIN 2.023 Albufeira PORTUGAL 2.016
Manises SPAIN 2.018 Loures PORTUGAL 2.017
Mejorada del Campo SPAIN 2.018 Grijó PORTUGAL 2.016
Miranda SPAIN 2.016 Fengshujinda CHINA 2.016
Orihuela SPAIN 2.023 Anhanghera BRAZIL 2.016
Sabadell SPAIN 2.022 Guarulhos BRAZIL 2.016
San Antonio SPAIN 2.023 Americana BRAZIL 2.016
Tarragona SPAIN 2.018 Porto Alegre BRAZIL 2.016
Villanubla SPAIN 2.019 Ribeirao Preto BRAZIL 2.018
Villanueva de Gállego SPAIN 2.023 Belo Horizonte BRAZIL 2.016
Santander SPAIN 2.017 Aruja BRAZIL 2.016
Granda-Siero SPAIN 2.016 Mauá BRAZIL 2.016
Almería SPAIN 2.016 Avellaneda ARGENTINA 2.016
Salamanca SPAIN 2.016    

Operating lease payments are recognised in the consolidated income statement as follows:

Thousands of Euros 2015 2014
Minimum lease payments, property (note 21.4) 299.769 246.797
Minimum lease payments, furniture and equipment (note 21.4) 7.045 5.552
Sublease payments (note 21.1) (23.025) (45.210)
Total 283.789 207.139

Sublease revenues comprise the amounts received from the concessionaires to carry out their activities, and in turn improve the Group’s commercial offerings to its customers, as well as those received from subleases to franchise holders.

Future minimum payments under non-cancellable operating leases for property are as follows:

Thousands of Euros 2015 2014
Less than one year 100.907 91.112
One to five years 80.458 87.626
Over five years 31.556 31.972
Total 212.921 210.710

Future minimum payments under non-cancellable operating leases for furniture and equipment are as follows:

Thousands of Euros 2015 2014
Less than one year 4.804 5.017
One to five years 4.722 4.383
Total 9.526 9.400

9. Financial assets

Details of financial assets in the consolidated statements of financial position at 31 December are as follows:

Thousands of Euros 2015 2014
Non-current assets
Non-current financial assets 118.236 81.162
Consumer loans from financing activities 458 363
Current assets
Trade and other receivables 221.193 244.592
Consumer loans from financing activities 6.548 6.362
Other current financial assets 15.718 12.144
TOTAL 362.153 344.623

9.1. Current and non-current consumer loans from financing activities

These balances mainly reflect loans granted by FINANDIA, EFC and DIA Argentina to individuals resident in Spain and Argentina, respectively, and are calculated at amortised cost, which does not differ from their fair value.

In 2015, as in the preceding period, in Spain the effective interest rate of credit card receivables ranged from 0% for customers with charge cards to a variable nominal monthly rate of 2.16% for customers making use of revolving credit facilities. These rates may be changed subject to prior individual notification to the customer. In Argentina the nominal annual rate for customers using revolving credit facilities was 46.53% and the annual nominal rate for financing purchases in 2-24 instalments was 38.50%.

Interest and similar income from these assets recognised in the consolidated income statement at 31 December 2015 amounted to Euros 2,087 thousand (Euros 2,075 thousand at 31 December 2014) (see note 21.1).

9.2. Trade and other receivables

Details of current and non-current trade and other receivables are as follows:

Thousands of Euros 2015 2014
Trade receivables 272.483 273.587
Total trade and other receivables 272.483 273.587
Less current portion 221.193 244.592
Total non-current (note 9.3) 51.290 28.995
a) Trade receivables

This line item includes balances receivable from suppliers amounting to Euros 114,777 thousand (Euros 149,257 thousand at 31 December 2014).

It also includes trade receivables for sales of merchandise due to the financing extended by the Group to its franchisees. This amount is disclosed at present value, having generated interest of Euros 2,099 thousand in 2015 and Euros 1,698 thousand in 2014, which has been recognised in the consolidated income statement.

b) Impairment

Movements in the provision for impairment of receivables (see other disclosures on credit risk in note 24 (d)) are as follows:

Thousands of Euros 2015 2014
At 1st January (32.863) (35.010)
Charge (16.483) (11.241)
Applications 617 608
Reversals 8.688 3.976
Transfers (1.075) -
Additions to the consolidated group - (3.227)
Exits from consolidation perimeter - 11.737
Translation differences 4.103 294
At 31st December (37.013) (32.863)
9.3 Other current and non-current financial assets

Details are as follows:

Thousands of Euros 2015 2014
Guarantees 43.289 38.063
Equity instruments 88 80
Loans to personnel 2.934 4.187
Other loans 1.688 2.503
Derivatives (note 10) 8.203 71
Other financial assets 9.862 13.907
Trade receivables > 1 year (note 9.2) 51.290 28.995
Other non-current financial assets 16.600 5.500
Total other financial assets 133.954 93.306
Less current portion 15.718 12.144
Total non-current 118.236 81.162

Guarantees are the amounts pledged to lessors to secure lease contracts. These amounts are measured at present value and any difference with their nominal value is recognised under prepayments for current or non-current assets. The interest on these assets included in the consolidated income statement in 2015 amounted to Euros 658 thousand (Euros 650 thousand in 2014).

An asset derived from sales tax in Brazil is the main component of both the current and the non-current balance under other financial assets, totalling Euros 9,862 thousand in 2015 and Euros 13,907 thousand in 2014.

Other financial assets under non-current assets at 31 December 2015 includes the deposits for the Euros 16,600 thousand withheld from the sellers in the acquisition of premises from the Eroski Group described in note 4, which is payable in instalments at 14, 36 and 48 months. In 2014 deposits of this type totalled Euros 5,500 thousand as a result of the acquisition of Schlecker. This amount was settled in June 2015 after the signing of the agreement reached with the seller (see notes 4 and 17.2).

10. Derivative financial instruments and hedges

Details of derivative financial instruments at the 2015 and 2014 reporting dates are as follows:

Thousands of Euros 2015 2014
Exchange derivatives–Cash flows hedges (note 9.3) 66 71
Exchange and interest derivatives–Fair value hedges (note 9.3) 8.137 -
Exchange derivatives–Cash flows hedges (note 17.1) (40) (757)
Interest rate derivatives–Cash flows hedges (note 17.1) - (87)
Total 8.163 (773)

The DIA Group holds various hedging instruments to mitigate possible adverse effects of exchange rates and interest rates. At 31 December 2015 «exchange rate and interest rate-fair value hedging derivatives» include the derivatives contracted in Brazil to hedge bank loans with third parties.

The effect of these instruments on the consolidated income statements for both periods is not significant.

11. Other equity-accounted investees

The balance under equity-accounted investees in 2015 reflects the entry of ICDC Services Sàrl into the consolidated group (see note 1). This company commenced its activities in 2016.

12 Other assets

Details of other assets are as follows:

2015 2014
Thousands of Euros Current Current
Prepayments for operating leases 3.339 2.716
Prepayments for guarantees 667 686
Prepayments for insurance contracts 809 951
Other prepayments 3.000 3.483
Total other assets 7.815 7.836

13. Inventories

Details of inventories are as follows:

Thousands of Euros 2015 2014
Goods for resale 554.276 545.707
Other supplies 8.213 7.412
Total inventories 562.489 553.119

At 31 December 2015 and 2014 there are no restrictions to the availability of any inventories.

The Group has taken out insurance policies to cover the risk of damage to its inventories. The coverage of these policies is considered sufficient.

14. Cash and cash equivalents

Details of cash and cash equivalents are as follows:

Thousands of Euros 2015 2014
Cash and current account balances 117.642 139.177
Cash equivalents 36.985 59.827
Total 154.627 199.004

Balances in current accounts earn interest at applicable market rates. Current investments are made for daily, weekly and monthly periods and have generated interest ranging from 0.1% to 0.97% in 2015 and from 0.01% to 0.95% in 2014.

The balance of cash equivalents at 31 December 2015 reflects the deposits maturing at under 3 months in Brazil. At 31 December 2014 this heading mainly included deposits in Brazil and Portugal.

15. Discontinued operations

On 20 June 2014 the Parent acquired a put option entailing an exclusivity agreement with Carrefour France SAS (the Option and Exclusivity Rights), whereby Carrefour undertook to purchase all of the share capital of DIA France SAS (DIA France), the company in which all of DIA’s activities in France are concentrated (the Transaction), should DIA exercise the Option. As per the Option and Exclusivity Rights, the enterprise value of DIA France was Euros 600 million, and this was used as a basis to determine the ultimate economic terms and conditions of the Transaction by applying certain adjustments relating to the net financial debt and working capital of DIA France that are commonplace in this type of operation. The Transaction was subject to a final agreement being reached following the consultation period with the DIA France workers’ committee, and execution thereof would in turn be subject to approval by the pertinent authorities. This transaction was completed on 30 November 2014, on which date the business in France ceased to form part of the DIA Group (see note 1). Following settlement at their carrying amount of the reciprocal payables/receivables between DIA and DIA France, the Parent received Euros 238,885 thousand, net of transaction costs, for the sale of all the share capital of DIA France SAS. After taking into consideration the provisions totalling Euros 20,800 thousand (see note 18.1) in respect of possible risks associated with the disposal of this company, this sale generated capital gains of Euros 260,063 thousand in the consolidated income statement for 2014 of the DIA Group.

In 2014 the Group also decided to wind up Beijing DIA Commercial Co. Ltd. In 2015 the Group has liquidated its net assets, including the cumulative translation differences, at an amount of Euros 1,477 thousand and is finalising the local administrative procedures for its dissolution (see notes 1 and 16.7).

The Group’s income and expenses in 2014 from these discontinued operations are as follows:

Thousands of Euros 2014
Income 1.513.851
Amortisation and depreciation (61.502)
Expenses (1.577.168)
Gross Margin (124.819)
Financial expenses (9.385)
Profit of companies accounted for using the equity method 445
Pre-tax gain obteined on the sale of subsidiaries 74.626
Loss before taxes of discontinued operations (59.133)
Income tax related to discontinued operations 186.418
Income tax of the discontinued subsidiaries (6.703)
Profit of discontinued operations 120.582
Net gain obteined on the sale of Group”s companies 260.063

The impact on cash flows of the operations discontinued by the Group in 2014 was as follows:

Thousands of Euros 2014
Net cash flows from operating activities (8.831)
Net cash flows used in investing activities 242
Net cash flows used in financing activities (13.884)
Total cash flows (22.473)

16. Equity

16.1. Capital

At 31 December 2014 share capital was Euros 65,107,055.80, represented by 651,070,558 shares of Euros 0.10 par value each, subscribed and fully paid. These shares are freely transferable.

At the Parent”s general shareholders” meeting held on 24 April 2015, a share capital decrease was agreed through the redemption of own shares acquired under a share buy-back programme pursuant to Commission Regulation (EC) 2273/2003 of 22 December 2003. The general shareholders” meeting authorised the Board of Directors to approve this decrease, with express powers to delegate this authority. On 27 July 2015 the Parent”s board of directors agreed to delegate the powers conferred by the shareholders at their general meeting to specific legal representatives of the Parent, who in exercise of these powers have carried out the capital decrease by redeeming 28,614,045 own shares of DIA held in its portfolio with a par value of Euros 0.10 each that represented 4.39% of the share capital (see note 16.3). On 2 October 2015 the deed of the capital decrease and the change to DIA”s articles of association was filed with the Mercantile Registry of Madrid

As a result at 31 December 2015 DIA’s share capital was Euros 62,245,651.30, represented by 622,456,513 shares of Euros 0.10 par value each, subscribed and fully paid. These shares are freely transferable.

The Euros 184,411 thousand difference between the cost incurred to acquire the own shares used in this capital redemption and their par value has been recognised with a charge of Euros 144,844 thousand to the share premium and Euros 39,567 thousand to reserves. DIA also appropriated an amount equal to the par value of the redeemed shares to a redeemed capital reserve, which will only become available once it meets the conditions for reducing share capital set forth in Article 335.c) of the Spanish Companies Act (see note 16.2).

As the redeemed shares were held by the Parent at the redemption date, no contributions were reimbursed as a result of this capital reduction.

The Parent’s shares are listed on the Spanish stock markets. According to public information filed with the Spanish National Securities Market Commission, the members of the board of directors control approximately 0.171% of the Parent”s share capital at the date of authorising these annual accounts for issue.

According to the same public information, the most significant shareholdings at the reporting date of these annual accounts are as follows:

Baillie Gifford & CO 10,488%
Blackrock INC. 4,935%
Black Creek Investment Management INC 3,069%
Ameriprise Financial, INC. 3,054%
Fidelity International Limited 1,017%

On 18 May 2015 Citigroup Global Markets Limited informed the Spanish National Securities Market Commission of the block trade of DIA shares undertaken on behalf of Cervinia Europe, S.à.r.l. and Blue Partners, S.à.r.l. This block trade comprised 55,200,000 DIA shares representing 8.48% of its share capital. On 19 May 2015 the aforementioned company reported the completion of this transaction for a total of Euros 408,480,000, with a price per share of Euros 7.40. This event resulted in the two proprietary directors, Mr. Nicolas Brunel and Mr. Nadra Moussalem, stepping down from the board of directors, having announced their resignation in letters dated 17 June 2015 and received at the Parent’s registered office on 18 June 2015. On 15 October 2015 Mr. Juan María Nin Génova joined DIA’s board of directors.

The Group manages its capital with the aim of safeguarding its capacity to continue operating as a going concern, so as to continue providing shareholder remuneration and benefiting other stakeholders, while maintaining an optimum capital structure to reduce the cost of capital.

To maintain and adjust the capital structure, the Group can adjust the amount of dividends payable to shareholders, reimburse capital, issue shares or dispose of assets to reduce debt.

Like other groups in the sector, the DIA Group controls its capital structure on a debt ratio basis. This ratio is calculated as net debt divided by adjusted EBITDA. Net debt is the sum of financial debt less cash and other items. Adjusted EBITDA is earnings before depreciation and amortisation, impairment and gains/losses on disposal of fixed assets and other non-current income and expenses.

In view of the ratios for 2015 and 2014, net debt has been calculated as follows:

Thousands of Euros 2015 2014
Total borrowings (note 17) 1.295.230 732.444
Less: cash and cash equivalents (notes 10 and 14) (162.830) (199.075)
Net debt 1.132.400 533.369
Adjusted EBITDA 610.162 585.319
Debt ratio 1,9x 0.9x

16.2. Reserves and retained earnings

Details of reserves and retained earnings are as follows:

Thousands of Euros 2015 2014
Legal reserve 13.021 13.021
Goodwill reserve 12.829 11.058
Capital redemption reserve 5.688 2.827
Other reserves 55.785 (579.965)
Profit attributable to equityholders ot the parent 299.221 329.229
Total 386.544 (223.830)

The Parent’s legal reserve has been provided for in compliance with article 274 of the Spanish Companies Act, which requires that companies transfer 10% of profits for the year to a legal reserve until this reserve reaches an amount equal to 20% of share capital. The legal reserve is not distributable to shareholders and if it is used to offset losses, in the event that no other reserves are available, the reserve must be replenished with future profits. At 31 December 2015, subsequent to the capital decrease carried out in the year, the Parent has more than the minimum amount required by law in this reserve.

The Parent’s goodwill reserve has been appropriated in compliance with the Spanish Companies Act, which requires companies to transfer profits equivalent to 5% of goodwill to a non-distributable reserve until this reserve reaches an amount equal to recognised goodwill in the statement of financial position of Spanish companies. In the absence of profit, or if profit is insufficient, freely distributable reserves should be used.

An amount equal to the par value of the own shares redeemed in 2015 and 2013 has been appropriated to the redeemed capital reserve. It will only be available once the Parent meets the conditions for reducing share capital set forth in Article 335.c) of the Spanish Companies Act (see note 16.1).

Other reserves include the reserves of the Parent and consolidation reserves, as well as the reserve for the translation of capital into Euros, totalling Euros 62.07. This non-distributable reserve reflects the amount by which share capital was reduced in 2001 as a result of rounding off the value of each share to two decimals.

At 31 December 2015 the Parent”s reserves remain negative in an amount of Euros 48,168 thousand, primarily as a result of the share capital decrease. Nonetheless, this situation is temporary and will change when the distribution of 2015 profits proposed in the Parent’s annual accounts is approved by the shareholders.

16.3. Other own equity instruments

a) Own shares

On 27 July 2011, in accordance with article 146 and subsequent articles of the Spanish Companies Act, the board of directors of the Parent approved an own share buy-back programme, the terms of which are as follows:

  • The maximum number of own shares that can be acquired is equivalent to 2% of share capital.

  • The maximum duration of the programme will be 12 months, unless an amendment to the term is announced in accordance with article 4 of Commission Regulation (EC) No 2273/2003.

  • The purpose of the programme is to meet obligations derived from the remuneration plan for board members and from the terms of any share distribution or share option plans approved by the board of directors.

  • A financial intermediary will be appointed to manage the programme, in accordance with article 6.3 of Commission Regulation (EC) No 2273/2003

    .

By 13 October 2011 the Company had acquired 13,586,720 own shares, reaching the maximum number foreseen in the buy-back programme.

On 14 November 2011 the board of directors approved the derivative acquisition of the Parent”s shares and the arrangement of any kind of financial instrument or contract to acquire own shares (in addition to those already held by the Parent at the date of approval) representing up to 2% of the Parent’s share capital.

As a result, on 21 December 2011 the Parent signed an agreement to acquire 13,586,720 own shares at a reference price of Euros 3.5580 per share. This contract included an option to acquire the shares at the agreed price by settling either in cash or at the difference between this agreed price and the share price on the contract expiry date, 21 January 2013. On expiry of this contract, the Parent agreed an extension, changing the contract settlement terms, leaving only the option of acquiring the shares for a price of Euros 5.1 per share on two expiry dates: 8,086,720 shares for Euros 41,242,272 on 21 July 2013, and the remaining 5,500,000 shares for Euros 28,050,000 on 21 January 2014. On the first of these expiry dates, 21 July 2013, the Parent exercised the option on 8,086,720 shares at the agreed price. On the second expiry date, 21 January 2014, the Parent signed an extension to the contract for the acquisition of 5,500,000 own shares, and undertook to acquire the shares on 21 January 2015. On this date the Parent renewed the contract to acquire these shares in two tranches. Tranche 1 for the purchase of 3,100,000 shares ended on 21 April 2015 and tranche 2 for the purchase of the remaining 2,400,000 shares matured on 21 January 2016. Finally on 23 March 2015 the Parent acquired all of the first tranche and 1,400,000 shares of the second tranche in advance for Euros 22,950,000. The acquisition of 1,000,000 shares at a price of Euros 5.10 per share was therefore pending (see note 17.1). On 21 January 2016 this last tranche was acquired for Euros 5,100,000 thousand.

As authorised by the sole shareholder of the Parent in a decision taken on 9 May 2011 and in accordance with the Parent’s Internal Regulations of Conduct on Stock Markets and the Own Share Policy approved by the board of directors, on 7 June 2012 the board of directors of DIA agreed to buy back additional own shares up to a maximum amount equivalent to 1% of the Parent’s share capital. This scheme to buy back 6,793,360 shares ended on 2 July 2012. A further 800,000 shares were acquired on 4 April 2013.

At a meeting held on 26 July 2013, the Parent”s board of directors, in exercise of the powers conferred on it by the shareholders at their general meeting, agreed to decrease DIA’s share capital by redeeming 28,265,442 own shares.

On 1 August 2014 the Parent signed an equity swap contract with Société Générale whereby the latter acquired 6,000,000 own shares at a price of Euros 6.1944 per share. The contract was settled on 1 September 2014, when the Parent recognised the shares in its own portfolio for a total of Euros 37,166,400. The 6,000,000 shares were acquired as part of the new long-term Incentives Plan for 2014-2016 (see note 17.1)

On 20 February 2015 the Parent”s board of directors agreed to carry out an own share buy-back programme (hereinafter the Buy-back Programme) in accordance with the authorisation conferred on the board of directors on 9 May 2011. The purpose of this Buy-back Programme was to decrease the Parent”s share capital, following authorisation of the Programme by the shareholders at the general meeting. The shareholders approved this share capital decrease at the general meeting held on 24 April 2015. The Buy-back Programme carried out over the course of the year and including a total of 28,614,045 shares was applied in full in this share capital decrease (see note 16.1).

Other transactions during 2015 and 2014 include the transfer of 3,324,980 shares and 393,219 shares, respectively, to the Group”s directors and management personnel as remuneration, with a charge of Euros 9,979 thousand and a credit of Euros 611 thousand to other reserves at 31 December 2015 and 2014, respectively. In 2013, 2012 and 2011, 398,019, 115,622 shares and 85,736 shares were transferred, respectively, to the Group’s directors and management as remuneration.

As a result, at the 2015 reporting date the Parent holds 8,183,782 own shares with an average purchase price of Euros 6.5448 per share, a total amount of Euros 53,560,917.32. These own shares are to be used to meet obligations to deliver shares to executives under the plans described in note 20.

Movement in own shares during 2015 is detailed below:

Number of shares Euros/share Total
31st December 2014 11.508.762 5,1147 58.864.185,94
Purchase of shares 28.614.045 6,9915 200.054.641,83
Delivery of shares (3.324.980) 5,4394 (18.085.767,45)
Capital reduction (28.614.045) 6,5448 (187.272.143,00)
31st December 2015 8.183.782 6,5448 53.560.917,32
b) Other own equity instruments

This reserve includes obligations derived from equity-settled share-based payment transactions following the approval by the board of directors and shareholders of the 2011-2014 long-term incentive plan and a multi-year incentive plan for executives. A new 2014-2016 long-term incentive plan (see note 20) was also included.

16.4. Dividends

Details of dividends paid are as follows:

Thousands of Euros 2015 2014
Dividends on ordinary shares 112.614 103.281
Dividend per share (in Euros) 0,18 0,16

Dividends per share (in Euros) are calculated based on the number of shares that entitle the holder to dividends at the distribution date, which in 2015 was 625,632,815 (645,503,860 shares in 2014).

The proposed distribution of the Parent”s 2015 profit to be submitted to the shareholders for approval at their ordinary general meeting is as follows:

Basis of distribution Euros
Profit for the year 216.975.254,59
Total 216.975.254,59
Basis of allocation Euros
Dividends (*) 122.854.546,20
Goodwill reserve 2.340.690,06
Other reserves 91.780.018,33
Total 216.975.254,59

(*) The directors have proposed that an ordinary dividend of Euros 0.20 (gross) be distributed for each of the shares with the corresponding economic rights. This figure is an estimate based on there being 614,272,731 shares that confer the right to receive this dividend, following any necessary adjustments. This estimate may vary depending on several factors, including the volume of shares held by the Parent.

The distribution of profit for 2014 approved by the shareholders at their ordinary general meeting on 24 April 2015 is as follows:

Basis of distribution Euros
Share premium 473.313.487,24
Other reserves 35.524.762,75
Total 508.838.249,99
Basis of allocation Euros
Compensation of losses of 2014 391.946.286,18
Dividends 112.613.906,70
Goodwill reserve 1.770.840,53
Other reserves 2.507.216,58
Total 508.838.249,99

16.5. Earnings per share

Basic earnings per share are calculated by dividing net profit for the period attributable to the Parent by the weighted average number of ordinary shares in circulation throughout the period, excluding own shares.

The weighted average number of ordinary shares outstanding is determined as follows:

Weighted average ordinary shares in circulation at 31/12/2015 Ordinary shares at 31/12/2015 Weighted average ordinary shares in circulation at 31/12/2014 Ordinary shares at 31/12/2014
Total shares issued 644.015.040 622.456.513 651.070.558 651.070.558
Own shares (18.069.243) (8.183.782) (7.647.083) (11.508.762)
Total shares available and diluted 625.945.797 614.272.731 643.423.475 639.561.796

Details of the calculation of basic earnings per share are as follows:

Basic and diluted earnings per share
2015 2014
Average number of shares 625.945.797 643.423.475
Profit for the period in thousands of Euros 299.221 329.229
Profit per share in Euros 0,48 0,51

There are no equity instruments that could have a dilutive effect on earnings per share. Diluted earnings per share are therefore equal to basic earnings per share.

16.6. Non-controlling interests

Non-controlling interests at 31 December 2015 and 2014 refers to the minority interest in Compañía Gallega de Supermercados, S.A.

16.7. Translation differences

Details of translation differences at 31 December 2015 and 2014 are as follows:

Thousands of Euros 2015 2014
Argentina (33.110) (22.537)
Brazil (53.262) (15.488)
China (*) (7.311) (7.811)
Total (93.683) (45.836)

(*) The translation differences relating to Beijing DIA Commercial Co. Ltd., included in China, the assets and liabilities of which have been liquidated at 31 December 2015, have been recognised as gains/losses on discontinued operations at 31 December 2015 (see note 15). At 31 December 2014 the assets and liabilities of this company were classified as held for sale and the translation differences totalled Euros 1,438 thousand.

17. Financial liabilities

Details of financial liabilities in the consolidated statement of financial position at 31 December are as follows:

Thousands of Euros 2015 2014
Non-current liabilities
Non-current borrowings 920.951 532.532
Other non-current financial liabilities 17.906 7.539
Current liabilities
Current borrowings 374.279 199.912
Trade and other payables 1.518.843 1.693.113
Other financial liabilities 145.679 136.189
Total financial liabilities 2.977.658 2.569.285

17.1. Borrowings

Details of borrowings are as follows:

Thousands of Euros 2015 2014
Debentures and bonds long term 495.862 494.701
Syndicated credits (Revolving credit facilities) 297.580 -
Mortgage loans 4.834 6.964
Other bank loans 95.652 11.277
Finance lease payables (note 6) 19.185 12.891
Guarantees and deposits received 7.838 5.543
Other non-current borrowings - 1.156
Total non-current borrowings 920.951 532.532
Debentures and bonds long term 3.500 3.396
Mortgage loans 2.145 2.039
Other bank loans 137.468 4.003
Other financial liabilities 42.266 65.216
Finance lease payables (note 6) 7.736 5.912
Credit facilities drawn down 175.073 93.516
Expired Interests 778 364
Guarantees and deposits received 4.760 5.283
Liabilities derivatives (note 10) 40 844
Other current borrowings 513 19.339
Total current borrowings 374.279 199.912

On 10 July 2014 the Parent successfully issued bonds amounting to Euros 500 million with a maturity of 5 years, a coupon of 1.50% and an issue price of 99.419%. These bonds were issued on the Irish Stock Exchange. The bonds were issued as part of the Euro Medium-Term Note Programme (EMTN), as approved by the Central Bank of Ireland on 3 July 2014. At 31 December 2015 the bonds were quoted at 101.090%.

Syndicated loans comprise non-current financing extended to the Parent by various national and foreign entities.

At 31 December 2014 the Parent had a Euros 400 million syndicated loan from a number of financial entities, which matures in July 2019 and a revolving credit facility of Euros 350 million, which expires in May 2016. At 31 December 2014 these syndicated loans, which accrue interest at market rates, had not been drawn down.

On 21 April 2015 DIA signed a new agreement with various financial entities for a syndicated loan of Euros 300 million, which matures in April 2018 but includes an option to extend the loan for a further two years. Also during 2015, the Parent cancelled the Euros 350 million revolving credit facility. The syndicated loans are used to finance ordinary business and working capital. At 31 December 2015 Euros 300 million had been drawn down on these syndicated loans, which accrue interest at market rates.

At the 2015 close all covenant ratios linked to this financing, as defined in the arrangement (*), and which are calculated based on the DIA Group’s consolidated annual accounts, have been met. Details are as follows: 

Financial covenant Syndicated loans in 2014 and 2015
Total net debt (*)/ EBITDA (*) < 3.50x

Mortgage loans include four contracts for which certain properties owned by the subsidiaries Twins Alimentación, S.A.U. and Schlecker, S.A.U. have been pledged as collateral. These loans fall due in 2018, 2019 and 2020. At 2015 year end the interest rates are between 2.00% and 5.07%. Details of these four mortgage loans at 31 December 2015 and 2014 are as follows:

2015 2014
Thousands of Euros Maturity Outstanding principal Net book value Outstanding principal Net book value
Warehouse–Dos Hermanas (Sevilla) 2019 2.929 9.476 3.736 9.756
Warehouse–Torredembarra (Tarragona) 2017 1.409 4.973 2.068 4.629
Warehouse–La Almunia de Doña Godina (Zaragoza) 2020 2.027 4.428 2.410 3.545
Warehouse–Sisante (Cuenca) 2018 614 2.502 789 2.405
Total mortgage loans at 31st December 6.979 21.379 9.003 20.335

“Other bank loans” comprise bilateral loans arranged by the Parent in December 2015 totalling Euros 180 million that bear interest at market rates and mature as follows:

Thousands of Euros 2016 2017 2018 Total
Other bank loans 90.000 70.000 20.000 180.000

“Other bank loans” also include a loan in DIA Brazil, which amounts to Euros 34,294 thousand, bears interest at market rates and falls due in January 2016. This heading also includes Euros 8,000 thousand in drawdowns on current debt instruments defined as “commercial paper” that DIA Portugal has negotiated with the banks.

At 31 December 2015 other current financial liabilities comprise Euros 37,166 thousand of the equity swap financed with Société Generale on 1 September 2014 and renewed upon its maturity with Banco Santander until 30 September 2016 and Euros 5,100 thousand of the equity swap renewed on 21 January 2015 that expires on 21 January 2016, originally arranged on 21 December 2011. In 2015 shares totalling Euros 22,950 thousand were liquidated. At 31 December 2014 other current financial liabilities includes Euros 65,216 thousand of equity swaps arranged at that time (see note 16.3 (a)). The Group has credit facilities with a total limit of Euros 280,074 thousand at 31 December 2015 and Euros 143,560 thousand at 31 December 2014, from which it had drawn down Euros 175,073 thousand and Euros 85,766 thousand, respectively. In addition, in 2015 El Árbol settled a Euros 7,750 thousand revolving credit facility upon its maturity which was fully drawn down at 31 December 2014. At 31 December 2015 the Company has other uncommitted credit facilities, with a limit of Euros 90,000 thousand (Euros 75,000 thousand at 31 December 2014). The credit facilities contracted by the Group in 2015 and 2014 accrue interest at market rates.

The decrease in current borrowings is due to the refund to the buyers of DIA France of the excess amount collected for the sale once the final price adjustments were made.

17.2. Other non-current financial liabilities

Details of other non-current financial liabilities are as follows:

Thousands of Euros 2015 2014
Grants 1.306 2.039
Other non-current financial liabilities 16.600 5.500
Total grants and other non-current financial liabilities 17.906 7.539

Other non-current financial liabilities at 31 December 2015 include the deposits for the Euros 16,600 thousand withheld from the sellers in the acquisition of premises from the Eroski Group described in note 4, which is payable in instalments at 14, 36 and 48 months. At 31 December 2014 Euros 5,500 thousand consisted of the amount withheld from the seller of Schlecker, S.A. to cover possible contingencies. Although due on 1 February 2018 this amount was settled in June 2015 after the signing of the agreement reached with the seller (see notes 4 and 9.3).

17.3. Trade and other payables

Details are as follows:

Thousands of Euros 2015 2014
Suppliers 1.376.937 1.551.267
Advances received from receivables 1.172 179
Trade payables 140.734 141.667
Total Trade and other payables 1.518.843 1.693.113

Suppliers and trade payables essentially include current payables to suppliers of goods and services, including those represented by accepted giro bills and promissory notes.

Trade and other payables do not bear interest.

The Group has reverse factoring facilities with limits of Euros 673,209 thousand and Euros 756,160 thousand at 31 December 2015 and 2014, respectively. Drawdowns total Euros 286,149 thousand at 31 December 2015 and Euros 327,579 thousand at 31 December 2014.

The information to be provided by the Spanish companies of the DIA Group as required by the reporting duty established in Spain’s Law 15/2010 of 5 July 2010, which amended Law 3/2004 of 29 December 2004 and introduced measures to combat late payment in commercial transactions, is as follows:

2015
Days
Average payment period to suppliers 45
Paid operations ratio 45
Pending payment transactions ratio 40
Amount (euros)
Total payments made 4.066.913.971
* Total payment pending 366.286.558

* Receptions unbilled and invoices included in the confirming lines at the year end previously mencioned, are not included in this amount.

17.4. Other financial liabilities

Details of other financial liabilities are as follows:

Thousands of Euros 2015 2014
Personnel 65.905 74.730
Suppliers of fixed assets 77.235 59.055
Other current liabilities 2.539 2.404
Total other liabilities 145.679 136.189

The variation in this balance is mainly due to the rise in payables to fixed asset suppliers in Brazil and the decrease in salaries payable in Spain, Brazil and Argentina.

17.5. Fair value estimates

The fair value of financial assets and liabilities is determined by the amount for which the instrument could be exchanged between willing parties in a normal transaction and not in a forced transaction or liquidation.

The following methods and assumptions were used to estimate the fair values:

  • Trade and other receivables, trade and other payables and other current assets and liabilities approximate their carrying amounts, due, largely, to the short-term maturities of these instruments.

  • The fair value of unlisted instruments, bank loans, finance lease payables and other non-current financial assets and liabilities is estimated by discounting future cash flows, using the available rates for debts with similar terms, credit risk and maturities, and is very similar to their carrying amount.

  • Derivative financial instruments are contracted with financial institutions with sound credit ratings. The fair value of derivatives is calculated using valuation techniques using observable market data for forward contracts.

Assets and liabilities at fair value have been measured using Level 2 inputs.

18. Provisions

Details of provisions are as follows:

Thousands of Euros Provisions for long-term employee benefits under defined benefit plans Tax provisions Social security provisions Legal contingencies provisions Other provisions Total provisions
At 31st December 2013 8.820 39.073 10.899 11.212 2.566 72.570
Translation differences - - (416) (44) (133) (593)
Charge 518 13.787 12.330 9.919 18.352 54.906
Applications - (12.313) (3.215) (2.572) (907) (19.007)
Reversals (241) (7.510) (2.156) (1.284) - (11.191)
Additions to the consolidated group 1.104 2.151 - 1.226 - 4.481
Exits from conloditanio perimeter (7.973) (4.229) (3.435) (1.567) - (17.204)
Other movements 42 2.062 - - 34 2.138
At 31st December 2014 2.270 33.021 14.007 16.890 19.912 86.100
Translation differences - (72) (2.519) (923) (97) (3.611)
Charge 486 4.622 5.874 5.245 2.023 18.250
Applications - (12.820) (3.068) (3.680) (1.349) (20.917)
Reversals (109) (848) (2.430) (9.168) (16.188) (28.743)
Transfers - 60 230 927 (1.217) -
Other movements 53 353 - - 18 424
At 31st December 2015 2.700 24.316 12.094 9.291 3.102 51.503

18.1. Provisions for taxes, legal contingencies and employee benefits

At 31 December 2015 the tax provisions to cover inspection-related risks amount to Euros 24,316 thousand (Euros 33,021 thousand at 31 December 2014). In 2015 the Parent paid Euros 7,020 thousand in respect of income tax for 2005 as a result of tax inspections. The non-current provisions in 2014 primarily comprise Euros 12,219 thousand made by the Parent to cover tax risks derived from the sale of DIA France (see notes 1 and 15). In 2015, the Parent paid Euros 5,800 thousand in respect of this item.

At 31 December 2015 this item includes provisions for lawsuits filed by workers (labour court claims) amounting to Euros 12,094 thousand (Euros 14,007 thousand at 31 December 2014).

Provisions for litigation with third parties amount to Euros 9,291 thousand at 31 December 2015 (Euros 16,890 thousand at 31 December 2014). The non-current provisions in 2014 primarily comprise Euros 4,891 thousand made by the Parent to cover legal risks derived from the sale of DIA France (see notes 1 and 15). In 2015, the Parent released Euros 2,010 thousand from this provision. The use and reversals of this provision include movements in the provision made at 31 December 2014 by the Parent related to the sale of DIA Turkey after the agreement was signed with the buyers on 22 June 2015.

18.2. Other provisions

This item reflects reversals of Euros 16,188 thousand, including the reversal of the variable price arising from the acquisition of El Árbol, considering the appraisal made by an independent expert.

Additionally, the charge to this item primarily reflects the contingent consideration that has been valued by an independent expert in relation to the acquisition of the business from Mobile Dreams Factory Marketing, S.L. by the Group.

19. Tax assets and liabilities and income tax

• INCOME TAX

Details of the income tax expense/income are as follows:

Thousands of Euros 2015 2014
Current income taxes
Current period 50.270 117.845
Prior periods” current income taxes 958 645
Total current income taxes 51.228 118.490
Deferred taxes
Source of taxable temporary differences 4.240 (1)
Source of deductible temporary differences (158.046) (24.810)
Reversal of taxable temporary differences (9.658) (25.699)
Reversal of deductible temporary differences 29.626 6.576
Total deferred taxes (133.838) (43.934)
TOTAL INCOME TAX (82.610) 74.556

Due to the different treatment of certain transactions permitted by tax legislation, the accounting profit of each Group company differs from the profit for tax purposes.

A reconciliation of accounting profit for the year with the total taxable income of the Group is as follows:

Thousands of Euros 2015 2014
Profit for the period before tax 218.116 283.198
Tax calculated at the tax rate of each country 58.164 73.901
Unrecognised tax credits 3.577 5.060
Non-taxable income (3.691) (759)
Non-deductible expenses 1.654 1.579
Deductions and credits for the current period (4.647) (671)
Adjustments for prior periods 958 645
Adjustments for prior periods–deferred taxes (142.280) (1.970)
Unrecognised deferred taxes (1.126) 642
Other adjustments 4.385 (3.073)
Tax rate”s change adjustment 396 (798)
Total income tax (82.610) 74.556

The tax rates of each of the different countries or jurisdictions in which the Group operates have been taken into account to perform this reconciliation. Details of these rates are as follows:

Spain 28%
DIA Portugal 26,59%
Argentina 35%
Brazil 34%
China 25%
Switzerland 24%

The Spanish companies Distribuidora Internacional de Alimentación, S.A. (Parent) and Twins Alimentación, S.A., Pe-Tra Servicios a la Distribución, S.L., Schlecker, S.A., Grupo El Árbol Distribución y Supermercados S.A. and Compañía Gallega de Supermercados S.A. (subsidiaries) filed consolidated tax returns for the first time in 2015 as part of tax group 487/12, pursuant to Title VII, Chapter VI of the Spanish Corporate Income Tax Law set forth in Royal Legislative Decree 27/2014 of 27 November 2014.

• TAX ASSETS AND TAX LIABILITIES

Details of the tax assets and liabilities for 2015 and 2014 recognised in the consolidated statement of financial position at 31 December are as follows:

Thousands of Euros 2015 2014
Deferred tax assets 271.480 147.890
Taxation authorities, VAT 41.160 32.965
Taxation authorities 28.314 31.382
Current income tax assets 49.663 42.593
Total tax assets 390.617 254.830
Deferred tax liabilities 3.193 2.749
Taxation authorities, VAT 55.475 45.110
Taxation authorities 37.464 37.330
Current income tax liabilities 4.111 8.747
Total tax liabilities 100.243 93.936

These deferred tax assets and liabilities (before consolidation adjustments) reconcile to the deferred taxes recognised in the consolidated statement of financial position (after consolidation adjustments) as follows:

2015 2014
Capitalised tax loss carryforwards 240.060 117.648
+ Deferred tax assets 70.253 75.720
Total deferred tax assets 310.313 193.368
Assets offset (38.833) (45.478)
Deferred tax assets 271.480 147.890
Deferred tax liabilities 42.026 48.227
Liabilities offset (38.833) (45.478)
Deferred tax liabilities 3.193 2.749

Details of and movements in the Group’s tax assets and liabilities (before consolidation adjustments) are as follows:

DEFERRED TAX ASSETS
Adjustments to tax rate Profit/(loss) Net Equity Additions to the consolidated group Exits from the consolidated group Exchange gains/losses
Thousands of Euros 1 Jan 2014 Adjustments Additions Disposals Additions Disposals Others 31 Dec 2014
Provision 21.119 - (39) 3.061 (232) - - - (1.610) (231) (1.053) 21.015
Onerous contracts 360 - 3 65 (194) - - - - - - 234
Portfolio provisions 75.662 - - 401 - - - - (67.000) - - 9.063
Share-based payments 2.885 - - 1.128 (6) - - - - - - 4.007
Other remuneration 3.072 - (13) 105 (215) - - - (2.691) - - 258
Loss carryforwards 32.296 - - 6.249 (5.234) - - - - 84.332 5 117.648
CVAE tax impact 405 - - - (189) - - - (216) - - -
Other 30.730 (495) (360) 14.210 (506) - - 1.272 (4.409) 895 (194) 41.143
Total non-curent deferred tax asset 166.529 (495) (409) 25.219 (6.576) - - 1.272 (75.926) 84.996 (1.242) 193.368
Adjustments to tax rate Profit/(loss) Net Equity Additions to the consolidated group Exits from the consolidated group Exchange gains/losses
Thousands of Euros 1 Jan 2015 Adjustments Additions Disposals Additions Disposals Others 31 Dec 2015
Provisions 21.015 - (145) 12.392 (1) - - - - 242 (7.440) 26.063
Onerous contracts 234 - 8 450 (176) - - - - - - 516
Portfolio provisions 9.063 - (156) 1.399 (6.399) - - - - - - 3.907
Share-based payments 4.007 - 229 31 (2.199) - - - - 174 - 2.242
Other remuneration 258 - 85 332 - - - - - - - 675
Loss carryforwards 117.648 - (529) 135.190 (12.274) - - - - 25 - 240.060
Other 41.143 - 147 8.613 (8.577) - - - - (441) (4.035) 36.850
Total non-curent deferred tax asset 193.368 - (361) 158.407 (29.626) - - - - - (11.475) 310.313
DEFERRED TAX LIABILITIES
Adjustments to tax rate Profit/(loss) Net Equity Additions to the consolidated group Exits from the consolidated group Exchange gains/losses
Thousands of Euros 1 Jan 2014 Adjustments Additions Disposals Additions Disposals Others 31 Dec 2014
Goodwill 68.778 - (71) 131 - - - - (67.411) - - 1.427
Amortisation and depreciation 50.991 - (2.673) 1.241 (4.380) - - 1.147 (20.269) 964 (51) 26.970
Portfolio provisions 38.711 - - - (18.306) - - - - - - 20.405
CVAE tax impact 1.176 - - - (550) - - - (626) - - -
Other 7.184 (495) (6) 1.377 (2.463) 24 - - (4.520) (1.684) 8 (575)
Total non-current deferred tax liabilities 166.840 (495) (2.750) 2.749 (25.699) 24 - 1.147 (92.826) (720) (43) 48.227
Adjustments to tax rate Profit/(loss) Net Equity Additions to the consolidated group Exits from the consolidated group Exchange gains/losses
Thousands of Euros 1 Jan 2015 Adjustments Additions Disposals Additions Disposals Others 31 Dec 2015
Goodwill 1.427 - (9) 80 (113) - - - - - - 1.385
Amortisation and depreciation 26.970 - (229) 1.640 (5.337) - - - - (28) (512) 22.504
Portfolio provisions 20.405 - 311 - (4.183) - - - - - - 16.533
Other (575) - (40) 2.487 (25) - (2) - - (242) 1 1.604
Total ID de Pasivo No Corriente 48.227 - 33 4.207 (9.658) - (2) - - (270) (511) 42.026

The Spanish income tax reform approved through Law 27/2014 of 27 November 2014 introduced a reduction in income tax rates (to 28% in 2015 and 25% in 2016 onwards), which had a tax effect on the deferred tax assets and liabilities of the Spanish companies which is recognised under «Adjustments to tax rate».

Based on the tax returns, the companies of the Group have the following accumulated tax losses, deductions and exemptions to be offset in future years amounting to Euros 1,052,391 thousand in 2015 and Euros 1,079,733 thousand in 2014.

limitation period (years) Loss carryforwards activated Loss carryforwards non-activated
Thousands of Euros Years in which generated Not subjetc to limitation 2016 2017 2018 2019 2020 > 2020 TOTAL
Distribuidora Internacional de Alimentación, S.A. 2014 351.423 - - - - - - 351.423 351.423 -
Twins Alimentación, S.A. 2004-2007 146.333 - - - - - - 146.333 146.333 -
Pe-Tra Servicios a la distribución, S.L. 1997-1999 18.549 - - - - - - 18.549 - 18.549
Schlecker S.A. 2012 945 - - - - - - 945 945 -
Grupo El Árbol, Distribución y Supermercados, S.A. 2000-2014 453.780 - - - - - - 453.780 453.780 -
Compañía Gallega de Supermercados, S.A. 2001-2014 3.736 - - - - - - 3.736 3.736 -
DIA ESHOPPING, S.L.U. 2015 393 - - - - - - 393 393 -
Dia Tian Tian Manag. Consulting Service & Co.Ltd. 2010-2012 - 4.018 3.656 - - - - 7.674 - 7.674
Shanghai DIA Retail Co.Ltd. 2010-2015 - 3.572 8.434 17.018 14.971 15.990 - 59.985 - 59.985
Dia Portugal Supermercados S.U., Lda 2009-2014 - - 753 1.125 - - 2.941 4.819 3.411 1.408
Total tax loss carryforwards 975.159 7.590 12.843 18.143 14.971 15.990 2.941 1.047.637 960.021 87.616

In 2015 the following subsidiaries included in the consolidated tax group of DIA in Spain have recognised tax loss carryforwards generated in years prior to joining the tax group:

  • Grupo El Árbol, Distribución y Supermercados S.A: an amount of Euros 113,445 thousand.

  • Compañía Gallega de Supermercados S.A: an amount of Euros 933 thousand.

  • Twins Alimentación S.A: an amount of Euros 19,793 thousand.

The subsidiary Pe-Tra Servicios a la Distribución, S.L. has derecognised tax loss carryforwards totalling Euros 1,098 thousand that were recognised at 31 December 2014.

The movements in the recognition and derecognition of tax bases in individual companies are the result of applying the new Income Tax Law 27/2014 from 2015 onwards. This Law stipulates that for the purposes of determining the taxable income of the tax group, accounting standards should be followed with regard to eliminations. Thus intragroup income and expenses should be eliminated before calculating the individual taxable income, from which the amount of the pre-consolidation tax losses that can be offset for each of the companies in the year is obtained.

Applying the above, the Group estimates that Grupo El Árbol Distribución y Supermercados S.A., Twins Alimentación S.A. and Compañía Gallega de Supermercados S.A. will be able to offset the amounts recognised in 2015 in the next four years.

For these purposes, the Group”s Parent filed a binding consultation to the Directorate-General for Taxation to obtain confirmation of its calculation criterion for the offset of tax loss carryforwards in the Group and the Directorate-General confirmed its criterion.

The directors do not expect that the years open to inspection or the appeals submitted will give rise to any major additional liabilities in relation to the consolidated financial statements taken as a whole.

20. Share-based payment transactions

On 7 December 2011 the DIA board of directors approved a long-term incentive plan for 2011-2014 and a multi-year variable remuneration plan proposed by the appointment and remuneration committee. Both of these plans are settled in Parent shares. The shareholders approved these plans at their general meeting and beneficiaries were informed of the plan regulations on 11 June 2012.

Under the share-settled long-term incentive plan, executives (including the executive director) of the Group were entitled to variable remuneration settled though shares in the Parent, receipt of which was dependent on whether the Parent and its Group met certain business targets over the 2011-2014 period, as well as certain indicators relating to the value of these shares. Beneficiaries were also required to remain as employees of or maintain their commercial relationship with the Parent and/or its subsidiaries on the plan reference dates. Settlements are being made at different stages throughout the plan up to 2016.

Under the multi-year variable remuneration plan, executives of the Group were awarded variable remuneration settled though shares in the Parent. Amounts relating to 2011 and 2012 were settled in 2013 and January 2014 and remuneration for 2013 and 2014 were to be settled in 2015 and January 2016, dependent on the Parent and its Group meeting certain business targets. Beneficiaries were also required to remain in the employment of or maintain their commercial relationship with the Parent and/or its subsidiaries on the plan settlement dates.

On 25 April 2014 the shareholders at their general meeting approved a long-term incentive plan for 2014-2016, to be settled with a maximum of 6,981,906 Parent shares, for the current and future executive directors, senior management and other key personnel of DIA and its subsidiaries, as determined by the board of directors. To receive the shares, the personnel who voluntarily join the plan must meet the requirements in its general terms and conditions. The purpose of the plan is to award and pay variable remuneration in DIA shares, based on fulfilment of a business target of the Parent and its Group and total earnings for the Parent’s shareholders. At 31 December 2015 the Parent estimates that 5,562,997 shares is the maximum number that will be awarded under this plan.

In 2015 the costs recognised in respect of these plans amount to Euros 4,249 thousand (Euros 12,028 thousand in 2014) and are recognised in personnel expenses in the consolidated income statement. The balancing entry was recognised under other own equity instruments. The payments made in 2015 and 2014 in relation to the long-term incentives plan 2011-2014 amounted to Euros 15,429 thousand and Euros 2,010 thousand respectively, with transfers of 3,242,482 and 328,272 shares, respectively.

21. OTher income and expenses

21.1. Other income

Details of other income are as follows:

Thousands of Euros 2015 2014
Fees and interest to finance companies (note 9.1) 2.087 2.075
Service and quality penalties 30.646 24.587
Revenue from lease agreements (note 8) 23.025 45.210
Other revenue from franchises 11.365 11.699
Revenue from commercial fees from concessions 827 647
Other income 28.265 21.032
Total other operating income 96.215 105.250

Penalties for service and quality include the income obtained by the Group from the collection of penalties charged to suppliers for lack of service or lack of quality in accordance with the agreements established with them.

21.2. Merchandise and other consumables used

This item includes purchases and changes in inventories, the cost of products sold by the finance company, as well as reductions due to volume discounts, other discounts, and exchange differences relating to purchases of this merchandise.

21.3. Personnel expenses

Details of personnel expenses are as follows:

Thousands of Euros 2015 2014
Salaries and wages 653.742 532.499
Social Security 168.739 141.632
Defined contribution plans 324 118
Expenses for share-based payment transactions 4.677 9.955
Other employee benefits expenses 19.751 20.736
Total personnel expenses 847.233 704.940

21.4. Operating expenses

Details of operating expenses are as follows:

Thousands of Euros 2015 2014
Repairs and maintenance 52.829 41.466
Utilities 86.147 68.921
Fees 23.220 17.399
Advertising 55.055 45.123
Taxes 23.576 18.948
Rentals, property (note 8) 299.769 246.797
Rentals, equipment (note 8) 7.045 5.552
Other general expenses 96.393 90.823
Total operating expenses 644.034 535.029

21.5. Amortisation, depreciation and impairment

Details are as follows:

Thousands of Euros 2015 2014
Amortisation of intangible assets (note 7.2) 8.862 6.859
Depreciation of property, plant and equipment (note 6) 205.164 177.745
Total amortisation and depreciation 214.026 184.604
Impairment of intangible assets and goodwill (note 7) 234 (38)
Impairment of property, plant and equipment (note 6) 10.779 5.563
Total impairment 11.013 5.525

21.6. Gains and losses on the disposal of fixed assets

Net losses of Euros 12,340 thousand and Euros 11,558 thousand were incurred on asset disposals in 2015 and 2014, respectively. In Spain, the net losses totalled Euros 7,230 thousand in 2015 (Euros 4,809 thousand in 2014). In Portugal, net losses recognised in 2015 amounted to Euros 1,087 thousand (Euros 3,264 thousand in 2014). In Argentina, net losses recognised in 2015 amounted to Euros 3,156 thousand (Euros 3,391 thousand in 2014). These losses are mainly due to stores being remodelled to the new DIA Maxi, DIA Market and Clarel formats.

These amounts mainly pertain to property, plant and equipment.

Gains on disposals of property, plant and equipment amounted to Euros 2,855 thousand and Euros 656 thousand in 2015 and 2014, respectively.

21.7. Net finance income

Details of finance income are as follows:

Thousands of Euros 2015 2014
Interest on other loans and receivables (note 9.1) 2.446 1.676
Dividends received 2 -
Exchange gains (note 21.8) 2.791 1.009
Change in fair value of financial instruments 2.768 1.684
Other finance income 1.258 12.078
Total financial income 9.265 16.447

Details of finance costs are as follows:

Thousands of Euros 2015 2014
Interest on bank loans 14.607 31.717
Intereses on debentures and bonds 8.872 4.027
Finance expenses for finance leases (note 6) 1.589 1.054
Exchange losses (note 21.8) 9.899 2.686
Change in fair value of financial instruments 424 2.024
Other finance expenses 29.900 15.751
Total financial expenses 65.291 57.259

At 31 December 2015, interest on bank loans includes the finance costs associated with bank loans, primarily in Spain and Brazil. At 31 December 2014 this balance included finance costs associated with the syndicated loan of Euros 24,599 thousand contracted by the Group, which included an amount of Euros 7,435 thousand of deferred finance costs due to the partial and total settlement of the loans arranged in 2011 and 2013.

Interest on bonds includes the accrued interest and costs as a result of the bond issue described in note 17.1.

Other finance costs at 31 December 2015 and 2014 primarily reflect the bank debit and credit interest rates in Argentina linked to its revenues.

21.8. Foreign currency transactions

Details of the exchange differences on foreign currency transactions are as follows:

Thousands of Euros 2015 2014
Currency exchange losses (note 21.7) (9.899) (2.686)
Currency exchange gains (note 21.7) 2.791 1.009
Trade exchange losses (1.167) (1.618)
Trade exchange gains 888 663
Total (7.387) (2.632)

21.9. Non-current expenses

Details of non-recurring income and expenses classified according to their nature in the consolidated income statement are as follows:

Thousands of Euros 2015 2014
Commercial margin (6.032) 433
Personnel expenses 76.030 44.658
Operating expenses 28.643 14.633
Total non-current expenses 98.641 59.724

These expenses comprise non-recurring items such as those associated with the reorganisation of the Group, improvements in the productivity and efficiency of processes, the business combinations carried out and incentive plans.

22. Commitments and contingencies

a) Commitments

Commitments pledged and received by the Group but not recognised in the consolidated statement of financial position comprise contractual obligations which have not yet been executed. The two types of commitments relate to cash and expansion operations. The Group also has lease contracts that represent future commitments undertaken and received.

Off-balance-sheet cash commitments comprise:

  • available credit facilities which were unused at the reporting date;

  • credit commitments undertaken by the Group’s finance company with customers within the scope of its operations, and banking commitments received.

Expansion operation commitments were undertaken for expansion at Group level.

Finally, commitments relating to lease contracts for property and furniture are described in note 8 Operating Leases.

Itemised details of commitments at 31 December 2015 and 2014 are as follows:

22.1. Pledged:

Thousands of Euros at 31st December 2015 IN 1 YEAR IN 2 YEARS 3-5 YEARS >5 YEARS TOTAL
Guarantees 27.483 59 625 9.112 37.279
Credit facilities to customers (finance companies) 77.700 - - - 77.700
Cash 105.183 59 625 9.112 114.979
Purchase options - 9.630 22.626 37.930 70.186
Commitments related to commercial contracts 16.914 3.917 2.784 28 23.643
Other commitments 2.302 2.917 3.487 19.419 28.125
Transactions / properties / expansion 19.216 16.464 28.897 57.377 121.954
Total 124.399 16.523 29.522 66.489 236.933
Thousands of Euros at 31st December 2014 IN 1 YEAR IN 2 YEARS 3-5 YEARS >5 YEARS TOTAL

Guarantees 18.421 - 122 8.174 26.717
Credit facilities to customers (finance companies) 76.164 - - - 76.164
Cash 94.585 - 122 8.174 102.881
Purchase options - - 31.356 39.531 70.887
Commitments related to commercial contracts 14.519 3.809 4.306 20 22.654
Other commitments 4.119 4.052 12.184 12.842 33.197
Transactions / properties / expansion 18.638 7.861 47.846 52.393 126.738
Total 113.223 7.861 47.968 60.567 229.619

The Parent is the guarantor of the drawdowns on the credit facilities made by its Spanish subsidiaries, which at 31 December 2015 amounted to Euros 1,270 thousand.

22.2. Received:

Thousands of Euros at 31st December 2015 IN 1 YEAR IN 2 YEARS 3-5 YEARS > 5 YEARS TOTAL
Available credit facilities 105.000 - - - 105.000
Available sindicated revolving credit facilities 400.000 - - - 400.000
Available confirming lines 387.060 - - - 387.060
Available commercial paper facilities 62.000 - - - 62.000
Cash 954.060 - - - 954.060
Guarantees received for commercial contracts 31.611 7.380 20.124 27.300 86.415
Other commitments - - - 163 163
Transactions / properties / expansion 31.611 7.380 20.124 27.463 86.578
Total 985.671 7.380 20.124 27.463 1.040.638
Thousands of Euros at 31st December 2014 IN 1 YEAR IN 2 YEARS 3-5 YEARS > 5 YEARS TOTAL
Available credit facilities 82.794 - - - 82.794
Available revolving credit facilities 750.000 - - - 750.000
Available confirming lines 428.581 - - - 428.581
Available commercial paper facilities 70.000 - - - 70.000
Cash 1.331.375 - - - 1.331.375
Guarantees received for commercial contracts 27.407 6.531 22.486 24.826 81.250
Other commitments - - - 172 172
Transactions / properties / expansion 27.407 6.531 22.486 24.998 81.422
Total 1.358.782 6.531 22.486 24.998 1.412.797

The decrease in cash commitments received between 2015 and 2014 is due primarily to the drawdown in full of one of the syndicated loans arranged by the Parent with various financial entities (see note 17.1) and the decrease in reverse factoring lines used above all by the Parent. Additionally, DIA Portugal maintains the commitments undertaken in 2014 in the form of current commercial paper, which are credit facilities negotiated with banks that DIA Portugal may use as a current account overdraft.

b) Contingencies

In 2014 DIA Brazil was inspected by the local taxation authorities, as a result of which it has received two additional tax assessments, one amounting to Euros 9,984 thousand (Brazilian Reais 43,054 thousand) in relation to a discrepancy concerning tax on revenues from discounts received from suppliers, and another amounting to Euros 58,104 thousand (Brazilian Reais 250,551 thousand) in relation to the recognition of movements of goods and the consequent impact on inventories. During 2015 the Group has continued to collaborate with the local authorities to clarify all movements of goods, which are consistent with the criteria followed in the countries in which the DIA Group operates. Given that the risk of loss associated with these lawsuits in both years has been considered remote, based on the analyses of the legal experts advising the Group, no provision has been made in this regard.

23. Related parties

Transactions other than ordinary business or under terms differing from market conditions carried out by the directors of the Parent

In 2015 and 2014 the directors of the Parent have not carried out any transactions other than ordinary business or applying terms that differ from market conditions with the Parent or any other Group company.

Transactions with directors and senior management personnel

Details of remuneration received by the directors and senior management of the Group in 2015 and 2014 are as follows:

Thousands of Euros
2015 2014
Directors Senior management personnel Directors Senior management personnel
5.235 10.912 1.875 4.989

In 2015 and 2014 the directors of the Parent earned Euros 1,089 thousand and Euros 978 thousand, respectively, in their capacity as board members.

In 2015 the shares under the first and second stages of the four-year incentive plan for 2011-2014 were awarded and the value of the shares awarded to the chairman and senior management has been recognised in remuneration earned in the year.

Article 39.5 of the Parent’s articles of association requires the disclosure of the remuneration earned by each of the present members of the board of directors in 2015 and 2014. Details are as follows:

2015 Thousands of Euros
Board members Financial instruments Fixed remuneration Variable remuneration Others
Ms Ana María Llopis Rivas 46,1 123,6 - -
Mr Ricardo Currás de Don Pablos (*) 1.731,3 667,1 1.831,0 6,8
Mr Julián Díaz González 36,6 80,9 - -
Mr Richard Golding 31,1 93,0 - -
Mr. Juan María Nin Génova 6,3 22,9 - -
Mr. Mariano Martín Mampaso 37,5 85,6 - -
Mr Pierre Cuilleret 36,6 85,9 - -
Ms Rosalía Portela de Pablo 26,0 78,8 - -
Mr Antonio Urcelay Alonso 26,0 79,8 - -
Mr Nadra Moussalem 17,2 34,3 - -
Mr Nicolas Brunel 17,2 34,3 - -
Total 2.012 1.386 1.831 7

(*) Remuneration as director plus remuneration as Board member.

2014 Thousands of Euros
Board members Financial instruments Fixed remuneration Variable remuneration Others
Ms Ana María Llopis Rivas 40,0 109,0 - -
Mr Ricardo Currás de Don Pablos (*) 20,0 519,5 417,2 15,1
Mr Julián Díaz González 37,3 69,8 - -
Mr Richard Golding 26,2 71,5 - -
Mr. Mariano Martín Mampaso 34,1 63,7 - -
Mr Pierre Cuilleret 37,3 69,8 - -
Ms Rosalía Portela de Pablo 20,0 54,5 - -
Mr Antonio Urcelay Alonso 20,0 54,5 - -
Mr Nadra Moussalem 34,1 63,7 - -
Mr Nicolas Brunel 34,1 63,7 - -
Total 303 1.140 417 15

(*) Remuneration as director plus remuneration as Board member.

During 2015 and 2014 the members of the board of directors and senior management personnel of the Group have not carried out operations with the Parent or Group companies other than ordinary operations under market conditions.

In accordance with Article 229 of the Revised Spanish Companies Act in relation to situations of conflicts of interest, the Director Mr. Pierre Cuilleret has stated that his spouse remains an independent Director of the Board of Carrefour Société Anonyme (company that has the same corporate activity as DIA). Additionally, the spouse of Mr. Cuilleret is the owner of 34,580 shares of Carrefour Société Anonyme (0.005% of the capital of the aforementioned company). This information was included for the first time in the Notes to the Consolidated Annual Accounts of DIA Group for 2012, year in which his spouse was appointed as an independent Director of the referred company.

24. Financial risk management: objectives and policies

The Group’s activities are exposed to market risk, credit risk and liquidity risk.

The Group’s senior executives manage these risks and ensure that its financial risk activities are in line with the appropriate corporate procedures and policies and that the risks are identified, measured and managed in accordance with DIA Group policies.

A summary of the management policies established by the board of directors of the Parent for each risk type is as follows:

a) Financial risk factors

The Group’s activities are exposed to various financial risks: market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk, and cash flow interest rate risk. The Group’s global risk management programme focuses on uncertainty in the financial markets and aims to minimise potential adverse effects on the Group’s profits. The Group uses derivatives to mitigate certain risks.

Risks are managed by the Group’s Finance Department. This department identifies, evaluates and mitigates financial risks in close collaboration with the Group’s operational units.

b) Currency risk

The Group operates internationally and is therefore exposed to currency risk when operating with foreign currencies, especially with regard to the US Dollar. Currency risk is associated with future commercial transactions, recognised assets and liabilities, and net investments in foreign operations.

In order to control currency risk associated with future commercial transactions and recognised assets and liabilities, Group entities use forward currency contracts negotiated with the Group’s Treasury Department. Currency risk arises on future commercial transactions in which the recognised assets and liabilities are presented in a foreign currency other than the Company’s functional currency.

In 2015 and 2014 the Group has performed no significant transactions in currencies other than the functional currency of each company. However, the Group has contracted exchange rate insurance policies for non-recurrent transactions in US Dollars.

The hedging transactions carried out in US Dollars during 2015 amounted to US Dollars 5,359 thousand (US dollars 5,862 thousand in 2014). This amount represented 98.38% of the transactions carried out in this currency in 2015 (99.99% in 2014). At 2015 year end, outstanding hedges in this currency total US Dollars 1,284 thousand (US Dollars 1,549 thousand in 2014) and expire in the next eleven months. These transactions are not significant with respect to the Group’s total volume of purchases.

The Group holds several investments in foreign operations, the net assets of which are exposed to currency risk. Currency risk affecting net assets of the Group’s foreign operations in Argentinian Pesos, Chinese Yuan and Brazilian Reals is mitigated primarily through borrowings in the corresponding foreign currencies.

At 31 December 2015, had the Euro risen/fallen by 10% against the US Dollar, with the other variables remaining constant, consolidated post-tax profit would have been Euros 271 thousand higher/lower (Euros 302 thousand in 2014), mainly as a result of translating trade receivables and debt instruments classified as available-for-sale financial assets.

The translation differences included in other comprehensive income are significant due to the steep devaluations of the Argentinian Peso and the Brazilian Real.  Had the exchange rates in the countries where the Group operates that use a currency other than the Euro depreciated/appreciated by 10% the translation differences would have varied by +11.01% / -13.46%, respectively, in the equity of the DIA Group.

The Group’s exposure to currency risk at 31 December 2015 and 2014 in respect of the balances outstanding in currencies other than the functional currency of each country is immaterial.

c) Price risk

The Group is not significantly exposed to risk derived from the price of equity instruments or listed raw material prices.

d) Credit risk

The Group is not significantly exposed to credit risk. The Group has policies to ensure that wholesale sales are only made to customers with adequate credit records. Retail customers pay in cash or by credit card. Derivative and cash transactions are only performed with financial institutions that have high credit ratings. The Group has policies to limit the amount of risk with any one financial institution.

The Group’s exposure to credit risk at 31 December 2015 and 2014 is shown below. The accompanying tables reflect the analysis of financial assets by remaining contractual maturity dates:

Thousands of Euros Maturity 2015
Guarantees per contract 42.649
Equity instruments - 88
Loans to personnel 2017-2019 350
Loans to third parties 2017-2020 531
Trade receivables 2017-2032 51.290
Other non-current financial assets 2017-2020 23.328
Consumer loans from finance companies 2017 458
Non-current assets 118.694
Guarantees 2016 640
Loans to personnel 2016 2.584
Other loans 2016 1.157
Other assets 2016 3.134
Trade receivables 2016 221.193
Consumer loans from finance companies 2016 6.548
Current assets 235.256
Thousands of Euros Maturity 2014
Guarantees per contract 38.002
Equity instruments - 80
Loans to personnel 2016-2018 445
Loans to third parties 2016-2019 625
Trade receivables 2016-2032 28.995
Other non-current finantial assets 2019 13.015
Consumer loans from finance companies 2016 363
Non-current assets 81.525
Guarantees 2015 61
Loans to personnel 2015 3.742
Other loans 2015 1.878
Other assets 2015 6.392
Trade receivables 2015 244.592
Consumer loans from finance companies 2015 6.362
Current assets 263.027

The returns on these financial assets totalled Euros 5,109 thousand in 2015 and Euros 4,476 thousand in 2014.

Details of non-current and current trade and other receivables by maturity in 2015 and 2014 are as follows:

Thousands of Euros
Current Total Unmatured Between 0 and 1 month Between 2 and 3 months Between 4 and 6 months Between 7 and 12 months
31st December 2015 221.193 166.024 13.046 36.214 3.213 2.696
31st December 2014 244.592 201.052 30.301 9.590 3.000 649
Thousands of Euros
Non-current Total Between 1 and 2 years Between 3 and 5 years Over five years
31st December 2015 51.290 14.552 28.529 8.209
31st December 2014 28.995 9.790 15.180 4.025

The Group’s general policy is to recognise an impairment loss for the entire amount of any outstanding receivable past due by over six months.

e) Liquidity risk

The Group applies a prudent policy to cover its liquidity risks based on having sufficient cash and marketable securities, as well as sufficient financing through credit facilities, to settle market positions. Given the dynamic nature of its underlying business, the Group’s Finance Department aims to be flexible with regard to financing through drawdowns on contracted credit facilities.

The Group’s exposure to liquidity risk at 31 December 2015 and 2014 is shown below. These tables reflect the analysis of financial liabilities by remaining contractual maturity dates:

Thousands of Euros Maturity 2015
Debentures and bonds long term 2019 495.862
Syndicated credits (Revolving credit facilities) 2018 297.580
Mortgage loan 2017-2020 4.834
Other bank loans 2017-2018 95.652
Finance lease payables 2017-2027 19.185
Guarantees and deposits received per contract 7.838
Other non-current financial liabilities 2019 17.906
Total non-current financial liabilities 938.857
Debentures and bonds long term 2016 3.500
Mortgage loan 2016 2.145
Other bank loans 2016 137.468
Other financial liabilities 2016 42.266
Finance lease payables 2016 7.736
Credit facilities drawn down 2016 175.073
Expired interest 2016 778
Guarantees and deposits received 2016 4.760
Derivatives 2016 40
Other financial debts 2016 513
Trade and other payables 2016 1.518.843
Suppliers of fixed assets 2016 77.235
Personnel 2016 65.905
Other current liabilities 2016 2.539
Total current financial liabilities 2.038.801
Thousands of Euros Maturity 2014
Debentures and bonds long term 2019 494.701
Mortgage loan 2016-2020 6.964
Other bank loans 2016-2019 11.277
Finance lease payables 2016-2027 12.891
Guarantees and deposits received per contract 5.543
Other non-current financial debt 2016 1.156
Other non-current financial liabilities 2018 7.539
Total non-current financial liabilities 540.071
Debentures and bonds long term 2015 3.396
Mortgage loan 2015 2.039
Other bank loans 2015 4.003
Other financial liabilities 2015 65.216
Finance lease payables 2015 5.912
Credit facilities drawn down 2015 93.516
Expired interest 2015 364
Guarantees and deposits received 2015 5.283
Derivatives 2015 844
Other financial debts 2015 19.339
Trade and other payables 2015 1.693.113
Suppliers of fixed assets 2015 59.055
Personnel 2015 74.730
Other current liabilities 2015 2.404
Total current financial liabilities 2.029.214

Details of non-current financial debt by maturity in 2015 and 2014 are as follows:

Thousands of Euros
2015 Total 2017 2018-2020 Over 2021
Debentures and bonds long term 495.862 - 495.862 -
Syndicated credits (Revolving credit facilities) 297.580 - 297.580 -
Mortgage loan 4.834 2.217 2.617 -
Bank loan 95.652 73.137 22.515 -
Finance lease payables 19.185 7.362 10.830 993
Guarantees and deposits received 7.838 - - 7.838
Total non-current debt 920.951 82.716 829.404 8.831
Thousands of Euros
2014 Total 2016 2017-2019 Over 2020
Debentures and bonds long term 494.701 - 494.701 -
Mortgage loan 6.964 2.125 4.442 397
Bank loan 11.277 5.875 5.402 -
Finance lease payables 12.891 4.788 7.372 731
Guarantees and deposits received 5.543 - - 5.543
Other non-current financial debt 1.156 548 216 392
Total non-current debt 532.532 13.336 512.133 7.063

The finance costs accrued on these financial liabilities totalled Euros 25,068 thousand and Euros 36,798 thousand in 2015 and 2014, respectively.

f) Cash flow and fair value interest rate risks

The Group’s interest rate risk arises from interest rate fluctuations that affect the finance cost of non-current borrowings issued at variable rates.

The Group contracts different interest rate hedges to mitigate its exposure, in accordance with its risk management policy. At 31 December 2015 there are no outstanding derivatives contracted with external counterparties to hedge the risk of interest rate fluctuations that could affect long-term financing. At 31 December 2014 the nominal amount of derivatives totalled Euros 215 million with maturity in 2015.

During 2015 hedging instruments as a percentage of the volume of average gross debt is 78.70%, compared with 80.32% in the previous year.

Group policy is to keep financial assets liquid and available for use. These balances are held in financial institutions with high credit ratings.

A 0.5 percentage point rise in interest rates would have led to a variation in profit after tax of Euros 513 thousand in 2015 (Euros 502 thousand in 2014).

25. Other Information

25.1. Employee Information

The average headcount of full-time-equivalent personnel, distributed by professional category, is as follows:

2015 2014
Management 206 224
Middle management 1.568 1.823
Other employees 40.850 41.197
Total 42.624 43.244

At year end the distribution by gender of Group personnel and the members of the board of directors is as follows:

2015 2014
Female Male Female Male
Board members 2 7 2 8
Senior management 1 8 2 6
Other management 61 140 59 134
Middle management 609 993 577 948
Other employees 29.276 14.635 30.126 14.268
Total 29.949 15.783 30.766 15.364

During 2015 the Group employed 1 executive (1 in 2014), 5 junior managers (24 in 2014) and 469 other employees (723 in 2014) with a disability rating of 33% or above (or an equivalent local classification).

25.2. Audit Fees

KPMG Auditores, S.L., the auditors of the annual accounts of the Group and other affiliates of KPMG International have invoiced the following fees for professional services during the years ended 31 December 2015 and 2014:

2015
Thousands of Euros KPMG Auditores, S.L. Other companies associated with KPMG International Total
Audit services 410 224 634
Other accounting review services 105 86 191
Tax advisory services - 62 62
Other services - 510 510
Total 515 882 1.397
2014
Thousands of Euros KPMG Auditores, S.L. Other companies associated with KPMG International Total
Audit services 529 250 779
Other accounting review services 189 225 414
Tax advisory services - 20 20
Other services - 31 31
Total 718 526 1.244

The amounts detailed in the above tables include the total fees for services rendered in 2015 and 2014, irrespective of the date of invoice.

25.3. Environmental information

The Group takes steps to prevent and mitigate the environmental impact of its activities.

The expenses incurred during the year to manage this environmental impact are not significant.

The Parent’s board of directors considers that there are no significant contingencies in connection with the protection and improvement of the environment and that it is not necessary to recognise any environmental provisions.

26. Events after the Reporting Period

At the date of authorising these consolidated annual accounts for issue, the Parent’s board of directors has approved the proposal of the Appointment and Remuneration Committee to appoint Ms. Angela Spindler as an independent director of the Parent, thereby filling the vacancy left by the resignation of Mr. Nicolas Brunel on 17 June 2015.

Creditos

Edita:
DIA, S.A.
Parque empresarial de las Rozas - Edif. TRIPARK
C/ Jacinto Benavente 2 A 28232 Las Rozas. Madrid - España

Realización y coordinación:
DEVA | Comunicación financiera y sostenibilidad

Diseño:
STROCEN.COM | New Corporate Design

Desarrollo web:
efe6 <Rebuilding ideas/>

Translation:
Tara O’Donoghue

Fotografía:
Jesús Umbría / DIA