H
79
Notes to the
consolidated
financial
statements
1 The Company and its operations
2 Basis of preparation
Ahold at a glance
Our strategy
Our performance
Governan
Financials
Investors
Ahold Annual Report 2013
The principal activity of Koninklijke Ahold N.V. (Ahold or the Company or Group or Ahold
group), a public limited liability company with its registered seat in Zaandam, the Netherlands,
is the operation of retail stores in Europe and the United States 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 (EU) and also comply with the
financial reporting requirements included in Part 9 of Book 2 of the Dutch Civil Code. As the
financial data of Koninklijke Ahold N.V. (the parent company) are included in the consolidated
financial statements, the income statement in the parent company financial statements is
presented in condensed form (in accordance with section 402, Book 2 of the Dutch Civil
Code).
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 2013 consisted of 52 weeks and ended on December 29, 2013. The
comparative financial year 2012 consisted of 52 weeks and ended on December 30, 2012.
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:
2013
2012
2011
Average exchange rate
0.7533
0.7782
Year-end closing exchange rate
0.7277
0.7566
0.7724
The preparation of financial statements requires management to make a number of estimates
and assumptions that 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)
The Company must estimate the allowances that are earned based on fulfillment of its related
obligations, many of which require management to estimate the volume of purchases that will
be made during a period of time. The Company must also estimate the amount of related
product that has been sold and the amount that remains in ending inventories and allocate
the allowance to cost of sales or inventories accordingly.
Income taxes Notes 3 and 10)
The ultimate tax effects of transactions may be uncertain for a considerable period of time,
requiring management to estimate the related current and deferred tax positions. The
Company recognizes liabilities for uncertain tax positions when it is more likely than not that
additional tax will be due. Judgment is required in determining whether deferred tax assets are
realizable.
Intangible assets (Note 3)
Intangible assets acquired in a business acquisition are stated at fair value, as determined at
the date of the acquisition. To determine the fair value at the acquisition date judgments and
estimates are required.
Leases and sale and leaseback transactions (Note 3)
The classification of leases as finance leases or operating leases requires judgments about the
fair value of the leased asset, the split of the fair value between land and buildings, the
economic life of the asset, whether or not to include renewal options in the lease term and the
appropriate discount rate to calculate the present value of the minimum lease payments.
Revenue recognition with respect to sale and leaseback transactions depends on whether the
Company transfers all risks and rewards to the buyer, does not maintain (or maintains only
minor) continuing involvement in the property other than the lease payments and whether the
transaction is established at fair value.
