Notes 14, 15, 16
16 Goodwill
-
-
The additions to property, plant and equipment include
capitalized borrowing costs of EUR 9 (2005: 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 percent -
6.8 percent (2005: 3.8 percent - 8.0 percent).
Other movements include transfers to and from
investment property.
The carrying amount of land and buildings includes an
amount of EUR 1,024 and EUR 322 (January 1, 2006:
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 16 (January 1, 2006: 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 335 (January 1,
2006: EUR 322) have been pledged as security for liabilities
15 Investment property
2006
2005
At the beginning of the year
At cost
621
618
Accumulated depreciation and impairment losses
(165)
(152)
Carrying amount
456
466
Additions
14
44
Depreciation
(12)
(16)
Impairment losses
(1)
(2)
Assets classified as held for sale or sold
(31)
(32)
Transfers to/from property, plant and equipment
34
(53)
Exchange rate differences
(29)
49
Closing carrying amount
431
456
At the end of the year
At cost
592
621
Accumulated depreciation and impairment losses
(161)
(165)
Carrying amount
431
456
Investment property consists of land and buildings held by
Ahold to earn rental income or for capital appreciation, or
both. 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 fair value of investment property as of December 31,
2006 amounted to approximately EUR 640 (January 1,
2006: EUR 651). The fair value of investment property as of
January 1, 2006 reflects a correction compared to Ahold's
2005 Annual Report to exclude EUR 34 transferred to assets
held for sale. 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. Rental income from investment property
included in the consolidated statements of operations
amounted to EUR 70 (2005 and 2004: EUR 63 and EUR 49,
respectively). Direct operating expenses (including repairs
and maintenance) arising from rental income generating
investment property in 2006 amounted to EUR 60 (2005
and 2004: EUR 56 and EUR 37, respectively). Direct
operating expenses (including repairs and maintenance)
arising from non-rental income generating investment
property in 2006 amounted to nil (2005 and 2004: EUR 1
and EUR 2, respectively).
The carrying amount of investment property includes an
amount of EUR 42 (January 1, 2006: EUR 47) and EUR 34
(January 1, 2006: EUR 26) in respect of assets held under
finance leases and financings, respectively. Ahold does not
have legal title to these assets. Company-owned investment
property with a carrying amount of EUR 12 (January 1,
2006: nil) has been pledged as security for liabilities.
2006 2005
At the beginning of the year
At cost
2,282
1,961
Accumulated impairment losses
(19)
Carrying amount
2,263
1,961
Acquisitions
155
42
Impairment losses
(3)
(19)
Assets classified as held for sale or sold
(5)
Exchange rate differences
(226)
279
Closing carrying amount
2,184
2,263
At the end of the year
At cost
2,205
2,282
Accumulated impairment losses
(21)
(19)
Carrying amount
2,184
2,263
Goodwill recognized upon acquisitions in 2006 relates
mainly to the acquisition of 27 Konmar stores by Albert Heijn
and Schuitema from Laurus (EUR 89) and the acquisition
of 14 stores by Giant-Carlisle from Clemens (EUR 46)
(see Note 4). In addition, goodwill was recognized upon
acquisitions of individual stores in the Albert Heijn Arena
and at Schuitema.
Ahold Annual Report 2006 87
