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Non-GAAP measures
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This Annual Report includes the
following non-GAAP financial
measures:
Net debt
Ahold at a glance
Our strategy
Our performance
Governan
Financials
Investors
Ahold Annual Report 2013
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, which sets
the dividend payout ratio 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
Management, Insurance, Communications,
Corporate Responsibility, and the majority of the
Executive Committee. 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 rental 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.
Identical sales, excluding VAT from tobacco
sales
Until July 1, 2013, Value Added Tax (VAT) on
tobacco products sold in the Netherlands was
levied over the retail price at the same time as
the excise duties were due. From July 1, 2013,
levying VAT on tobacco products was aligned
with the mechanism of levying VAT on all other
consumer products. The result is a reduction in
recognized net sales related to tobacco products
without a corresponding reduction in volume or
gross margin. Ahold's management believes that
excluding the pre- as well as the post-July 1, 2013
VAT from tobacco sales in the measure of identical
sales provides a better insight into the growth of its
identical store sales.
Liquidity
Cash and cash equivalents, short-term deposits
and similar instruments, 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 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 and similar instruments.
In management's view, because cash, cash
equivalents, and short-term deposits and similar
instruments 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.