Notes to the consolidated financial statements
2 www.ahold.com/reports2008
1 The Company and its operations
2 Basis of preparation
3 Significant accounting policies
Changes in accounting policies
As of 2008, Ahold has early applied the revised IAS 1
"Presentation of Financial Statements". The revised standard
introduces requirements to present all changes in equity arising
from transactions with owners in their capacity as owners
separately from non-owner changes in equity and to disclose (i)
income tax related to each component of other comprehensive
income and (ii) reclassification adjustments relating to
components of other comprehensive income. In addition, when
an entity applies an accounting policy retrospectively or makes
a retrospective restatement or reclassification of items in its
financial statements, IAS 1 requires the presentation of a third
balance sheet as of the beginning of the earliest comparative
period. The adoption of the revised IAS 1 did not have an
impact on the Company's financial results or position.
Income statement reclassification
Comparative information in the consolidated income statement
has been changed to properly present certain intercompany
eliminations on the same line item. This resulted in an increase
of selling expenses by EUR 18 million and a decrease of general
and administrative expenses by EUR 18 million, with no impact
to operating income.
Financial statements
AHOLD ANNUAL REPORT 2008 49
The principal activities of Koninklijke Ahold N.V. ("Ahold"
or the "Company" or "Group" or "Ahold Group"), a public
limited liability company with its registered seat in Zaandam,
the Netherlands, and its head office in Amsterdam, the
Netherlands, are the operation of retail food stores in the United
States and Europe through subsidiaries and joint ventures. In
addition, some of its subsidiaries finance, develop and manage
store sites and shopping centers, primarily to support Ahold's
retail operations. Ahold's significant subsidiaries, joint ventures
and associates are listed in Note 35.
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 2008 and
relevant to Ahold 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. Historical cost is used as the
measurement basis unless otherwise indicated.
Ahold's financial year is a 52- or 53-week period ending on
the Sunday nearest to December 31. Financial year 2008
consisted of 52 weeks and ended on December 28, 2008.
The comparative financial year 2007 consisted of 52 weeks
and ended on December 30, 2007.
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:
2008
2007
Average exchange rate
0.6828
0.7307
Year-end closing exchange rate
0.7111
0.6795
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 assumptions, 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. 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. The estimates,
assumptions and judgments that management considers most
critical relate to:
Vendor allowances (Note 3);
Leases and sale and leaseback transactions (Note 3);
Impairments (Note 3);
Non-current assets held for sale and discontinued operations
(Notes 3 and 5);
Income taxes (Notes 3 and 10);
Equity method of accounting for ICA (Note 14);
Measurement of defined benefit obligations (Note 22);
Provisions and contingencies (Notes 23 and 33).
As of 2008, Ahold has early applied IFRS 8 "Operating segments".
IFRS 8 introduces new disclosure requirements with respect to
segment information. The adoption of IFRS 8 did not have an
impact on Ahold's segment structure, consolidated financial
results or position; however, segment results no longer include
intercompany royalties. Comparative information has been
changed accordingly, with the effect that Giant-Carlisle's 2007
operating income increased by EUR 14 million and the Corporate
Center's operating result decreased by the same amount.
