11 Property, plant and equipment continued
12 Investment property
Ahold
Annual Report 2011
Groupata glance
Performance
Governance
Notes to the consolidated financial statements continued
Investors
The additions to property, plant and equipment include capitalized borrowing costs of €2 million (2010: €3 million). 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 4.6 percent and 7.6 percent (2010: 5.2 percent-9.5 percent).
Other movements mainly include transfers to and from investment property.
The carrying amount of land and buildings includes an amount related to assets held under finance leases and financings of €850 million
and €196 million (January 2, 2011: €795 million and €203 million), respectively. In addition, the carrying amount of machinery and
equipment includes an amount of €5 million (January 2, 2011: €6 million) relating to 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 €67 million (January 2, 2011:
€74 million) has been pledged as security for liabilities, mainly for loans.
million
2011
2010
At the beginning of the year
At cost
Accumulated depreciation and impairment losses
809
(227)
734
(203)
Carrying amount
582
531
Additions 27 16
Acquisitions through business combinations - -
Depreciation
(23)
(25)
Impairment losses
(1)
(1)
Assets classified from (to) held for sale or sold
(7)
(5)
Transfers from property, plant and equipment
3
37
Exchange rate differences
12
29
Closing carrying amount
593
582
At the end of the year
At cost
870
809
Accumulated depreciation and impairment losses
(277)
(227)
Carrying amount
593
582
A significant portion of Ahold's investment property is comprised of shopping centers containing both an Ahold store and third-party retail
units. 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 a shopping center leased to a third-party retailer as investment property, unless it represents an insignificant portion
of the property.
In 2011Ahold recognized impairment losses of €1 million related to Other Europe.
The carrying amount of investment property includes an amount related to assets held under finance leases and financings of €40 million
and €53 million (January 2, 2011€45 million and €51 million), respectively. Ahold does not have legal title to these assets. Company-
owned investment property with a carrying amount of €70 million (January 2, 2011€70 million) has been pledged as security for liabilities,
mainly for loans.
The fair value of investment property as of January 1, 2012 amounted to approximately €835 million (January 2, 2011: €745 million).
Fair value represents the price at which a property could be sold to a knowledgeable, willing party, and has generally been determined
based on internal appraisals, using discounted cash flow projections. For mixed use properties and properties held for strategic purposes,
Ahold cannot determine the fair value of the investment property reliably. In such cases, the fair value is assumed to be equal to the
carrying amount.
Rental income from investment property included in the income statement in 2011 amounted to €72 million (2010: €67 million). Direct
operating expenses (including repairs and maintenance but excluding depreciation expense) arising from rental-income-generating and
non-rent-generating investment property in 2011 amounted to €30 million (2010: €27 million).
