2 www.ahold.com/reports2008
Notes to the consolidated financial statements
3 Significant accounting policies continued
Provisions
New accounting policies not yet effective for 2008
The IASB issued several Standards, or revisions thereto, and
Interpretations in 2008 and 2007, which are not yet effective
for 2008. Except as detailed below, the Company expects
these will not have an impact on its financial statements.
4 Acquisitions
2008 Acquisitions
2007 Acquisitions
Financial statements
AHOLD ANNUAL REPORT 2008 57
Provisions are recognized when (i) the Company has a present
(legal or constructive) obligation as a result of past events,
(ii) it is more likely than not that an outflow of resources will
be required to settle the obligation and (iii) the amount can be
reliably estimated. The amount recognized is the best estimate
of the expenditure required to settle the obligation. Provisions
are discounted whenever the effect of the time value of money
is significant.
Restructuring provisions are recognized when the Company
has approved a detailed formal restructuring plan, and the
restructuring either has commenced or has been announced to
those affected by it. Onerous contract provisions are measured
at the amount by which the unavoidable costs to fulfill
agreements exceeds the expected benefits from such
agreements. The provision for the Company's self-insurance
program is recorded based on claims filed and an estimate of
claims incurred but not yet reported. The provision includes
expenses incurred in the claim settlement process that can be
directly associated with specific claims. Other expenses incurred
in the claim settlement process are expensed when incurred.
The Company's estimate of the required liability of such claims
is recorded on a discounted basis, utilizing an actuarial method,
which is based upon various assumptions that include, but are
not limited to, historical loss experience, projected loss
development factors and actual payroll costs.
In 2008, the IASB issued a revised IFRS 3 "Business
Combinations" and amended IAS 27 "Consolidated and
Separate Financial Statements". These standards were changed
to address guidance for applying the acquisition method of
accounting for business combinations by stressing the
"economic entity" view of the reporting entity and greater
use of fair value through the income statement. The adoption
of these standards will impact the Company's financial results
or position prospectively for business combinations occurring
as from 2010.
In 2007, the IASB issued IFRIC 13 "Customer Loyalty
Programs", which addresses accounting by entities that grant
customer loyalty award credits to their customers. The adoption
of IFRIC 13 in 2009 will not have an impact on the Company's
financial results or position; however, it may result in
reclassifications in the consolidated balance sheet and
consolidated income statement. Ahold is in the process of
evaluating the impact of such reclassifications.
In 2008, the IASB issued IFRIC 15 "Agreements for the
Construction of Real Estate", which provides guidance on the
accounting for agreements for the construction of real estate,
particularly with regard to the accounting standard to be applied
and the timing of revenue recognition. IFRIC 15 is effective for
annual periods beginning on or after January 1, 2009. Ahold is
in the process of evaluating the impact on the Company's
financial results or position.
In 2008, the IASB issued IFRIC 16 "Hedges of a Net
Investment in a Foreign Operation", which addresses the foreign
exchange risks from investments in foreign operations that
qualify for hedge accounting and how net investment hedge
accounting should be applied in the consolidated financial
statements. IFRIC 16 is effective for annual periods beginning
on or after October 1, 2008, with earlier application permitted.
The adoption of this interpretation could impact the Company's
financial results or position prospectively.
In December 2008, Stop Shop completed the acquisition
of three stores from Grand Union Markets. The total purchase
consideration amounted to EUR 16 million. Intangible assets
were recognized for EUR 11 million relating to lease rights.
No goodwill was recognized on this acquisition.
Ahold completed several other acquisitions that were insignificant
both individually and in the aggregate. All acquisitions have
been accounted for by the purchase method of accounting.
Under the Purchase and Sale Agreement between Ahold,
Schuitema and CVC Capital Partners ("CVC"), as described in
Note 5, Ahold retained 56 Schuitema stores and transferred
these to the Albert Heijn segment. This transaction was not
accounted for as an acquisition; the assets and liabilities related
to these stores have been retained in Ahold's consolidated
balance sheet at their carrying amounts.
In 2007, Ahold completed several acquisitions that were
insignificant both individually and in the aggregate. All
acquisitions have been accounted for by the purchase
method of accounting.
