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Notes to the consolidated financial statements
1 The Company and its operations
2 Basis of preparation
3 Significant accounting policies
Financials
Koninklijke Ahold N.V. ("Ahold" or "the Company" or "Group"
or "Ahold Group") is a public limited liability company with its
registered seat in Zaandam, the Netherlands, and its head office
in Amsterdam, the Netherlands. The principal activity of Ahold is
the operation of retail food stores in the United States and Europe
through subsidiaries and joint ventures. Ahold's significant
subsidiaries, joint ventures and associates are listed in Note 36.
These financial statements have been prepared in accordance
with International Financial Reporting Standards ("IFRSs") as
adopted by the European Union. 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 2009 consisted
of 53 weeks and ended on January 3, 2010. The comparative
financial year 2008 consisted of 52 weeks and ended on
December 28, 2008.
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:
2009 2008
Average exchange rate 0.7194 0.6828
Year-end closing exchange rate 0.6980 0.7111
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, 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 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);
Company and multi-employer pension obligations (Note 23);
Provisions and contingencies (Notes 24 and 34).
Changes in accounting policies
As of 2009, Ahold has applied IFRIC 13 "Customer Loyalty
Programs," which addresses accounting by entities that grant
customer loyalty award credits to their customers. The adoption
of IFRIC 13, which Ahold has applied retrospectively, resulted in
a decrease in net sales of €14 million, a decrease in cost of sales
of €10 million, a decrease in general and administrative expenses
of €3 million and a decrease in interest expense of €1 million
from previously reported 2008 results. The 2008 balance sheet
has also been changed accordingly, with the effect that other
current financial liabilities decreased by €1 million and other
current liabilities increased by the same amount.
As of 2009, rent income earned by certain real estate subsidiaries
is netted against the related expense, whereas previously it was
included in net sales. Comparative information has been changed
accordingly, with the effect that net sales decreased by €60 million,
selling expenses decreased by €49 million and cost of sales
decreased by €11 million.
As of 2009, following the changes made to IAS 40 "Investment
Property" as part of the 2008 annual improvements to IFRSs,
property that is being constructed or developed for future use
as investment property is considered investment property.
Comparative information has been changed accordingly, with
the effect that the property, plant and equipment balance
decreased by €6 million and the investment property balance
increased by the same amount as of December 28, 2008.
Retrospective amendments
As of 2009, Ahold's 49 percent stake in its joint venture JMR
was reclassified from assets held for sale to investments in joint
ventures because the sale of JMR is no longer considered to
be highly probable as defined in IFRS 5. As a result of this
reclassification, JMR is accounted for using the equity method.
This change has been applied retrospectively and resulted in a
reclassification from assets held for sale to investments in joint
ventures of €159 million and €161 million as of December 28,
2008 and December 30, 2007, respectively. It also resulted in
a cumulative increase in investments in joint ventures and equity
of €11 million and €10 million as of December 28, 2008 and
December 30, 2007, respectively. In the income statement for
2008, this amendment has resulted in an increase in net income
of €3 million; this was due to an increase in operating income
(reduced general and administrative expenses) of €5 million,
an increase in share in income of joint ventures of €15 million,
an increase in income tax charge of €1 million and decrease in
income from discontinued operations of €16 million. The relevant
cash flow statement amounts for 2008 have been reclassified
accordingly.
Furthermore, comparative information in the consolidated
statement of changes in equity has been changed to properly
present certain components of equity. The net equity position as
of December 28, 2008 and December 30, 2007 did not change.
Relevant adjustments have been made to the Five-year overview.
Ahold Annual Report 2009 61
