Non-GAAP measures
This Annual Report includes the following
non-GAAP financial measures:
Ahold Annual Report 2012 51
Ahold at a glance
Our strategy
Our performance
Governance
Financials
Investors
Adjusted income from continuing operations
Income from continuing operations adjusted for significant non
recurring items. This measure is a component of Ahold's dividend
policy, whereby the dividend payout ratio has been set to be 40-50%
of adjusted income from continuing operations.
Comparable sales
Identical sales plus net sales from replacement stores in local currency.
Comparable sales are only reported for Ahold USA.
Corporate Center costs
Corporate Center costs relate to the responsibilities of the Corporate
Center, including Corporate Finance, Corporate Strategy, Internal
Audit, Legal, Compliance, Human Resources, Information Technology,
Insurance, Communications, Corporate Responsibility, and the
Corporate Executive Board. Corporate costs also include results from
other activities coordinated centrally but not allocated to any operating
company. Underlying Corporate Center costs exclude impairments of
non-current assets, gains and losses on the sale of assets, and
restructuring and related charges, including business acquisition
transaction costs.
Free cash flow
Operating cash flows from continuing operations minus net capital
expenditures minus net interest paid, plus dividends received. Ahold's
management believes this measure is useful because it provides insight
into the cash flow available to, among other things, reduce debt and
pay dividends.
Gross rent
Gross rent comprises all of the rent that Ahold is required to pay to
third parties and is not corrected for rent income Ahold receives from
other third parties.
Identical sales
Net sales from exactly the same stores and online sales in existing
market areas, in local currency for the comparable period.
Identical sales, excluding gasoline net sales
Because gasoline prices have experienced greater volatility than food
prices, Ahold's management believes that by excluding gasoline net
sales, this measure provides a better insight into the growth of its
identical store sales.
Liquidity
Cash and cash equivalents, short-term deposits, and undrawn funds
available under the committed credit facility. Ahold's management
believes this measure is useful because it provides insight into funds
available to manage the company.
Net debt
Net debt is the difference between (i) the sum of loans, finance lease
liabilities, cumulative preferred financing shares and short-term
debt (i.e. gross debt) and (ii) cash, cash equivalents, and short-term
deposits. In management's view, because cash, cash equivalents,
and short-term deposits can be used, among other things, to repay
indebtedness, netting this against gross debt is a useful measure for
investors to judge Ahold's leverage. Net debt may include certain cash
items that are not readily available for repaying debt.
Net lease adjusted debt EBITDAR
Net debt increased by the present value of future operating lease
commitments over underlying operating income before depreciation,
amortization and gross rent expense. Ahold's management believes
this measure is useful because it provides insight into Ahold's leverage,
adjusted for the impact of operating leases that count for a significant
part of Ahold's capital structure.
Net sales at constant exchange rates
Net sales at constant exchange rates exclude the impact of using
different currency exchange rates to translate the financial information
of Ahold subsidiaries or joint ventures to euros. Ahold's management
believes this measure provides a better insight into the operating
performance of Ahold's foreign subsidiaries or joint ventures.
Net sales in local currency
In certain instances, net sales are presented in local currency. Ahold's
management believes this measure provides a better insight into the
operating performance of Ahold's foreign subsidiaries.
Operating income in local currency
In certain instances operating income is presented in local currency.
Ahold's management believes this measure provides better insight into
the operating performance of Ahold's foreign subsidiaries.
Return on capital employed
Return on capital employed (ROCE) is calculated as the sum of
underlying operating income and the 50% gross rent add back,
divided by the annual rolling average of the sum of property, plant and
equipment, intangible assets, working capital components, and gross
rent expense multiplied by eight.
Total shareholder return
Total Shareholder Return (TSR) is the sum of share price growth and
dividends paid. In this report, we disclose TSR as defined for the
purposes of Ahold's Global Reward Opportunity (GRO) program.
A daily TSR index obtained from Thomson Reuters is averaged over a
six-month period preceding the year end (average TSR index). Annual
TSR is an increase in the average TSR index compared to the average
TSR index in the previous year.
Underlying operating income
Total operating income, adjusted for impairments of non-current
assets, gains and losses on the sale of assets, and restructuring and
related charges, including business acquisition transaction costs.
Ahold's management believes this measure provides better insight
into the underlying operating performance of Ahold's operations.
Management believes that these non-GAAP financial measures
allow for a better understanding of Ahold's operating and financial
performance. These non-GAAP financial measures should be
considered in addition to, but not as substitutes for, the most directly
comparable IFRS measures.
