o www.ahold.com/reports2009
Notes to the consolidated financial statements
29 Earnings per share
30 Financial risk management and financial instruments
Financials
The calculation of basic and diluted net income per share attributable to common shareholders is based on the following data:
2009 2008
Earnings million)
Net income attributable to common shareholders for the purposes of basic earnings per share
Effect of dilutive potential common shares - reversal of preferred dividends from earnings
894
32
1,077
31
Net income attributable to common shareholders for the purposes of diluted earnings per share
926
1,108
Number of shares (in millions)
Weighted average number of common shares for the purposes of basic earnings per share
Effect of dilutive potential common shares:
Share options and conditional shares
Cumulative preferred financing shares
1,180
9
54
1,174
9
55
Weighted average number of common shares for the purposes of diluted earnings per share
1,243
1,238
The calculation of the basic and diluted income per share from continuing operations attributable to common shareholders is based on
the same number of shares as detailed above and the following earnings data:
million 2009 2008
Income from continuing operations, attributable to common shareholders
for the purposes of basic earnings per share
Effect of dilutive potential common shares - reversal of preferred dividends from earnings
972
32
887
31
Income from continuing operations, attributable to common shareholders
for the purposes of diluted earnings per share
1,004
918
Basic and diluted income per share from discontinued operations attributable to common shareholders amounted to negative €0.06
and negative €0.07, respectively (2008: €0.16 basic and €0.16 diluted). They are based on the income from discontinued operations
attributable to common shareholders of negative €78 million (2008: €190 million) and the denominators detailed above.
Comparative amounts have been adjusted from amounts previously reported to reflect the effect of the changes in accounting policies
and retrospective amendments (see Note 3).
Financial risk management
The treasury function provides a centralized service to the Company for funding, foreign exchange, interest rate, liquidity and counterparty
risk management. Treasury operates in a centralized function within a framework of policies and procedures that is reviewed regularly.
The treasury function is not operated as a profit center. Treasury's function is to manage the financial risks that arise in relation to
underlying business needs. Ahold's Corporate Executive Board has overall responsibility for the establishment and oversight of the treasury
risk management framework. Ahold's management reviews material changes to treasury policies and receives information related to
treasury activities.
In accordance with its treasury policies, Ahold uses derivative instruments solely for the purpose of hedging exposures. These exposures
are mainly connected with the interest rate and currency risks arising from the Company's operations and its sources of finance. Ahold
does not enter into derivative financial instruments for speculative purposes. The transaction of derivative instruments is restricted to
treasury personnel only and Ahold's internal control and internal audit departments review the treasury internal control environment
regularly. Relationships with the credit rating agencies and monitoring of key credit ratios are also managed by the treasury department.
Ahold's primary market risk exposures relate to foreign currency exchange rates and interest rates. In order to manage the risks arising
from these exposures, various financial instruments may be utilized.
Currency risk
Ahold operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect
to the U.S. dollar. Since Ahold's subsidiaries primarily purchase and sell in local currencies, the Company's exposure to exchange rate
movements in commercial operations is naturally limited. The Company is subject to foreign currency exchange risks due to exchange
rate movements in connection with the translation of its foreign subsidiaries' income, assets and liabilities into euros for inclusion in its
consolidated financial statements. To protect the value of future foreign currency cash flows, including lease payments, dividends and
firm purchase commitments, and the value of assets and liabilities denominated in foreign currency, Ahold seeks to mitigate its foreign
currency exchange exposure by borrowing in local currency and entering into various financial instruments, including forward contracts
and currency swaps. It is Ahold's policy to cover foreign exchange transaction exposure in relation to existing assets, liabilities and firm
purchase commitments. Translation risk related to Ahold's foreign subsidiaries, joint ventures and associates is not actively hedged,
except for cash flows from dividends not denominated in euro.
Ahold Annual Report 2009 96
