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Notes to the consolidated financial statements
1 The Company and its operations
2 Basis of preparation
Ahold at a glance I Business review I Governance I Financials I Investors
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 2014 consisted of 52 weeks and ended on December 28, 2014. The comparative financial
year 2013 consisted of 52 weeks and ended on December 29, 2013.
These consolidated financial statements are presented in euros The following exchange rates of the
euro against the U.S. dollar and the Czech crown (CZK) have been used in the preparation of these
financial statements:
2014
2013
U.S. dollar
Average exchange rate
0.7529
0.7533
Year-end closing exchange rate
0.8213
0.7277
Czech crown
Average exchange rate
0.0363
0.0385
Year-end closing exchange rate
0.0360
0.0365
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 fulfilment of its related obligations,
many of which require management to estimate the volume of purchases that will be made during a period of
Ahold
Annual Report 2014
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.
Impairments (Note 3)
Judgments and estimates are required, not only to determine whether there is an indication that an asset may
be impaired, but also whether indications exist that impairment losses previously recognized may no longer
exist or may have decreased (impairment reversal).
Company and multi-employer pension obligations (Note 23
The present value of the pension obligations depends on a number of assumptions that are determined on an
actuarial basis. The assumptions used in determining the net cost (income) for pensions include the discount rate
that should be used to determine the present value of estimated future cash outflows expected to be required
to settle the pension obligations. Other key assumptions comprise longevity and future salary and pension
increases. Additional information is disclosed in Note 23.
Provisions and contingencies (Notes 24 and 34)
The recognition of provisions requires estimates and judgment regarding the timing and the amount of outflow
of resources. The main estimates are as follows:
a Self-insurance program: estimates and assumptions include an estimate of claims incurred but not yet
reported, historical loss experience, projected loss development factors, estimated changes in claim
reporting patterns, claim settlement patterns, judicial decisions and legislation.
a Loyalty programs: estimated cost of benefits to which customers participating in the loyalty program are
entitled, which includes assumptions on redemption rates.
a Claims and legal disputes: management, supported by internal and external legal counsel, where
appropriate, determines whether it is more likely than not that an outflow of resources will be required to
settle an obligation. If this is the case, the best estimate of the outflow of resources is recognized.
