BsimEiHHta
Non-GAAP measures
41
This Annual Report includes
the following non-GAAP
financial measures:
Liquidity
Net debt
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.
Adjusted 2014 sales
Net sales in 2014 plus net sales in the first week
of 2015. Ahold's management believes that this
measure provides an insight into the impact of an
additional week in the current year when net sales
are compared to the previous year.
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 Center 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.
Earnings before interest, taxes, depreciation
and amortization, or EBITDA
EBiTDA is net income before net financial expense,
income taxes, depreciation and amortization.
However, EBiTDA does not exclude impairments.
EBiTDA allows investors to analyze the profitability
between companies and industries by eliminating
the effects of financing (i.e., net financial expense)
and capital investments (i.e., depreciation
and amortization).
Free cash How
Operating cash Rows 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 Row 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.
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.
Ahold
Annual Report 2015
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 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,
The comparable periods for identical
and comparable sales
The comparable periods for identical and
comparable sales for the year correspond to the
adjusted year 2014.
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 and margin
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.
