BsimEiHHta
Non-GAAP measures
This Annual Report includes
the following non-GAAP
financial measures:
Ahold at a glance I Business review I Governance I Financials I 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, which sets
the dividend payout ratio to be 40-50% of adjusted
income from continuing operations.
Comparable sales, excluding gasoline net sales
Identical sales plus net sales from replacement stores
in local currency, 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 comparable store sales.
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 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 and other items,
including business acquisition transaction costs.
Free cash How
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 comparable 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
comparable sales provides a better insight into the
growth of its identical comparable 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 consumer online sales
Total online sales to customers, excluding sales taxes
and value-added taxes, but including sales of third
parties via bol.com's Plaza. Ahold management
believes that this measure provides more insight into
the growth of our online businesses.
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 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.
Ahold
Annual Report 2014
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, restructuring and related charges, and other
unusual items. 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.
