Note 36
The following entities qualified as discontinued operations under IFRS in 2004:
Bomprego Hipercard
Thailand
G. Barbosa
BI-LO/Bruno's
Spain
Disco
Deli XL
Discontinued operation as of
Opening balance sheet date 2004
Opening balance sheet date 2004
End of Q1 2004
End of Q1 2004
End of Q2 2004
End of Q3 2004
End of Q3 2004
Reversal of depreciation
amortization in 2004
4
1
2
91
21
1
2
5 Net gain (loss) on divestments
During 2004 Ahold completed several divestments for cash consideration. Under IFRS the gains and losses on divestments
differ significantly from those accounted for under Dutch GAAP due to the following reasons:
Until December 2000 it was Ahold's policy, under Dutch GAAP, to charge goodwill against equity upon the acquisition of an
operation. When divesting an operation within five years after its acquisition, Ahold recognized a pro rata share of that
goodwill to consolidated net income, to be included in the calculation of the divestment result. Such recognition is not
allowed under IFRS, which results in increased divestment results under IFRS in 2004 compared to those accounted for
under Dutch GAAP.
Upon divestment, Ahold recognizes currency translation adjustments ("CTA") that arose after December 29, 2003 under
IFRS. These may differ from the CTA that arose under Dutch GAAP, due to differences in net equity of the divested foreign
operation and the fact that only CTA arising after December 29, 2003 are recognized on divestments under IFRS.
Under IFRS, Ahold ceases to depreciate and amortize non-current assets (or disposal groups) that classify as held for sale.
As a consequence, and due to other differences in the measurement of assets and liabilities under IFRS compared to Dutch
GAAP, the net equity of a divested operation under IFRS typically differs from the net equity measured under Dutch GAAP,
which results in a difference in divestment result.
The effect of the differences mentioned above on the 2004 divestment result is as follows:
Divested operations
Bomprego/Hipercard (Brazil)
CRC Thailand (Thailand)
Ahold Spain (Spain)
Disco SA (Argentina)
Reversal goodwill
recognition
205
8
23
16
Difference in CTA
recognition
303
18
181
Difference in
carrying amount
(3)
(1)
(38)
13
Net impact
divestment result
505
25
(15)
210
Total
252
502
(29)
725 I
6 Currency translation reserve
Ahold has applied the one-time exemption under IFRS to set the currency translation reserve to zero for all investments in
foreign subsidiaries, joint ventures and associates as of December 29, 2003. The negative balance of the currency translation
reserve of EUR 1,897 is recognized as an adjustment to retained earnings as of December 29, 2003. As a result, there has
been no impact on total group equity, but only an impact on the composition of group equity.
7 Cumulative preferred financing shares
IFRS requires the cumulative preferred financing shares to be classified as debt instead of equity, because the payment of
the dividends is not at the discretion of the Company. In substance, the dividend is a contractually required fixed interest rate
payment and the instruments are treated similar as perpetual debt. Dividends on these shares are classified as interest expense
under IFRS, which resulted in additional (non tax-deductible) interest expenses of EUR 44 in 2004. The nominal value of
EUR 666 of the cumulative preferred financing shares is recognized as a non-current liability.
AHOLD ANNUAL REPORT 2005 181
