Notes to the consolidated financial statements:
Notes 1, 2
Financial statements
All amounts in millions, except where otherwise indicated.
1 The Company and its operations
The principal activities of Koninklijke Ahold N.V. ("Ahold"
or the "Company"), a public limited liability company with its
registered seat in Zaandam, the Netherlands, and its head
office in Amsterdam, the Netherlands, are the operation
through subsidiaries and joint ventures of retail trade stores
in the United States and Europe and a foodservice business
in the United States. In addition, some of its subsidiaries
finance, develop and manage store sites and shopping
centers primarily to support Ahold's retail operations. On
November 6, 2006, Ahold announced its intention to divest
its remaining foodservice business, U.S. Foodservice.
Ahold's significant subsidiaries, joint ventures and
associates are listed in Note 36.
As a result of Ahold's listing on the New York Stock Exchange
(the "NYSE"), Ahold's common shares are registered with
the U.S. Securities and Exchange Commission (the "SEC")
and accordingly, Ahold files its Annual Report on Form 20-F,
of which these consolidated financial statements form a
part, with the SEC.
2 Basis of preparation
These financial statements have been prepared in
accordance with International Financial Reporting
Standards ("IFRS") as adopted by the European Union
("EU"). All standards and all interpretations issued by the
International Accounting Standards Board (the "IASB")
and the International Financial Reporting Interpretations
Committee (the "IFRIC") effective for 2006 have been
adopted by the EU, except that the EU carved out certain
hedge accounting provisions of IAS 39. Ahold does not
utilize this carve out permitted by the EU. Consequently,
the accounting policies applied by Ahold also comply fully
with IFRS. For the principal differences between IFRS and
accounting principles generally accepted in the United
States ("US GAAP"), see Note 35.
Ahold's financial year is a 52- or 53-week period ending on
the Sunday nearest to December 31. Financial year 2006
consisted of 52 weeks and ended on December 31, 2006.
The comparative financial years 2005 and 2004 consisted
of 52 and 53 weeks, respectively, and ended on January 1,
2006 and January 2, 2005, respectively.
These consolidated financial statements are presented in
euros. The following exchange rates of the euro against the
U.S. dollar have been used in the preparation of these
financial statements, whereby the average exchange rate
is based on average quarterly rates:
2006 2005 2004
Average exchange rate 1.2556 1.2421 1.2422
Year-end closing exchange rate 1.3199 1.1842 1.3558
The preparation of financial statements requires
management to make a number of estimates and
assumptions. These estimates and assumptions affect the
reported amounts of assets and liabilities, of revenues and
expenses and the disclosure of contingent assets and
liabilities. All the assumptions, anticipations, expectations
and forecasts used as a basis for certain estimates within
these consolidated financial statements represent good-faith
assessments of Ahold's future performance for which
management believes there is a reasonable basis. These
estimates and assumptions represent Ahold's view at the
times they are made, and only then. They involve risks,
uncertainties and other factors that could cause the
Company's actual future results, performance and
achievements to differ materially from those forecasted.
Information about the estimates, assumptions and
judgments that management considers most critical is
included in the following notes:
Note 3 - accounting for leases, sale and leaseback
transactions and vendor allowances;
Notes 3 and 11 - accounting for income taxes;
Note 12 - classification of U.S. Foodservice as part of
the Company's continuing operations;
Note 16 - measurement of the recoverable amount
of assets or cash-generating units;
Note 18 - equity method of accounting for ICA;
Note 24 - measurement of defined benefit obligations;
and
Notes 25 and 34 - provisions and contingencies.
As the financial data of Koninklijke Ahold N.V. (the parent
company) are included in the consolidated financial
statements, the statements of operations in the parent
company financial statements are presented in condensed
form (in accordance with section 402, Book 2 of the
Netherlands Civil Code).
Ahold Annual Report 2006 61
