Note 15
The additions to property, plant and equipment include capitalized borrowing costs of EUR 7 (2004: EUR 7). Generally, the
capitalization rate used to determine the amount of capitalized borrowing costs is a weighted average of the interest rate
applicable to the respective operating companies. This rate ranged between 3.8% - 8.0% (2004: 5.3% - 12.7%). Other
movements include transfers to and from investment property.
The carrying amount of land and buildings includes an amount of EUR 1,056 and EUR 378 in respect of assets held under
finance leases and financings, respectively. In addition, the carrying amount of machinery and equipment includes an amount
of EUR 17 in respect of assets held under finance leases. Ahold does not have legal title to these assets. Company-owned
property, plant and equipment with a carrying amount of EUR 322 have been pledged as security for liabilities.
15 INVESTMENT PROPERTY
2005 1
change in strategy, announced in the fourth quarter of 2005. The Stop Shop/Giant-Landover Arena recognized EUR 8
in impairment losses. In Europe, Ahold recorded an impairment loss of EUR 4 due to increased competitive pressure.
2004
At the beginning of the year
At cost
618
587
Accumulated depreciation and impairment losses
(152)
(98)
Carrying amount
466
489
Opening carrying amount
466
489
Additions
44
60
Depreciation
(16)
(19)
Impairment losses
(2)
(21)
Assets classified as held for sale or sold
(32)
(90)
Transfers to from property, plant and equipment
(53)
68
Exchange rate differences
49
(21)
Closing carrying amount
456
466
At the end of the year
At cost
621
618
Accumulated depreciation and impairment losses
(165)
(152)
Carrying amount
456
466
Investment property consists of land and buildings held by Ahold to earn rental income or for capital appreciation, or both.
These properties are not used by Ahold in the ordinary course of business. Ahold often owns (or leases under a finance lease)
shopping centers containing both an Ahold store and third-party retail units. In these cases, the third-party retail units generate
rental income, but are primarily of strategic importance to Ahold in its retail operations. Ahold recognizes the part of an owned
(or leased under a finance lease) shopping center that is leased to third-party retailers as investment property, unless it
represents an insignificant portion of the property. The majority of Ahold's investment property is comprised of these types of
property. Land and buildings leased to franchisees are not considered to be investment property as they contribute directly to
the sale of goods.
The impairment losses recognized in 2005 and 2004 relate mainly to Schuitema. Assets classified as held for sale or sold
during 2005 mainly relates to the planned sale of two shopping centers in Poland and one in the Czech Republic and
represents the part of these shopping centers that is leased to third-party retailers.
The fair value of investment property as of January 1, 2006 amounted to approximately EUR 685 (2004: EUR 667). Fair value
represents the price at which a property could be sold to a knowledgeable, willing party and has generally been determined
using discounted cash flow projections.
AHOLD ANNUAL REPORT 2005 133
