Note 3
Consolidation of group companies
Non-current assets held for sale and discontinued operations
Foreign currency translation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries. Subsidiaries
are entities over which the Company has control. Control is the power to govern the financial and operating policies, generally
accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that
are currently exercisable or convertible are considered when assessing whether the Company controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Company, and are deconsolidated from
the date that control ceases.
All intra-group transactions, balances, income and expenses are eliminated upon consolidation. Unrealized losses on
transactions between group companies are eliminated unless the transaction provides evidence of an impairment of the assets
transferred. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency with the
accounting policies of the Company.
Minority interests are recorded in the consolidated balance sheets and the consolidated statements of operations for the
minority shareholders' share in the net assets and the income or loss of subsidiaries, respectively. The interest of minority
shareholders in an acquired subsidiary is initially measured at the minority interest's proportion of the net fair value of the
assets, liabilities and contingent liabilities recognized. Ahold does not recognize the minority shareholders' share in the loss to
the extent this would result in recording a minority interests receivable balance, unless the minority shareholder has a binding
obligation and is able to fund the shareholders' deficits of the subsidiary. For 2005 and 2004, the minority interests in the net
assets and net income of subsidiaries mainly relate to the minority shareholders' interest in Schuitema N.V. ("Schuitema"), in
which Ahold has a 73.2% interest.
Schuitema applies the structure regime (governance rules applicable to large companies in the Netherlands). Ahold, as the
majority shareholder, controls all resolutions at the general meeting of shareholders and has representation on the supervisory
board of Schuitema. Based on these rights, Ahold has effective control over Schuitema and, accordingly, Schuitema has been
consolidated for all financial years presented.
Non-current assets and disposal groups (a group of assets to be disposed of in a single transaction and liabilities directly
associated with those assets) are classified as held for sale if their carrying amount will be recovered through a sale transaction
rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset
(or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale,
which should be expected within one year from the date of classification as held for sale.
Non-current assets (or disposal groups) classified as held for sale are measured at the lower of the asset's carrying amount
and the fair value less costs to sell. These assets may be a component of an entity, a disposal group of assets or individual
non-current assets. Assets classified as held for sale, or included within a disposal group that is classified as held for sale,
are not depreciated.
A discontinued operation is a component of an entity that either has been disposed of, or that is classified as held for sale,
and: (a) represents a separate major line of business or geographical area of operations; (b) is part of a single co-ordinated plan
to dispose of a separate major line of business or geographical area of operations; or (c) is a subsidiary acquired exclusively
with a view to resale. Results from discontinued operations are presented separately as a single amount on the statements of
operations. Results from operations qualifying as discontinued operations as of the balance sheet date for the latest period
presented, that have previously been presented as results from continuing operations, are re-presented as results from
discontinued operations for all periods presented.
The financial statements of each subsidiary are prepared in its functional currency, which is determined based on the primary
economic environment in which such subsidiary operates. In preparing the financial statements of the subsidiaries in their
functional currencies, transactions in foreign currencies of these entities are recorded at the rates of exchange prevailing at
the transaction dates. At each balance sheet date, monetary items denominated in foreign currencies are translated into the
AHOLD ANNUAL REPORT 2005 93
