Notes to the consolidated financial statements
96
11 Property, plant and equipment (continued)
12 Investment property
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Ahold at a glance
Business review
Governance
Financials
Ahold
Annual Report 2015
Buildings and land includes improvements to these assets. "Other" buildings and land mainly includes distribution centers and warehouses. "Other" property, plant and equipment mainly consists of trucks, trailers and other
vehicles. Assets under construction mainly consists of stores.
In 2015, Ahold recognized net impairment losses of €26 million for property, plant and equipment (2014: €10 million). These were mainly related to Ahold USA (2015: €17 million, 2014: €7 million) and the Netherlands
(2015: €9 million, 2014: €3 million) and were recognized for various operating and closed stores.
The higher of the value in use or fair value less cost of disposal represents an asset's recoverable amount. The value in use method involves estimating future cash flows. The present value of estimated future cash flows has
been calculated using pre-tax discount rates ranging between 6.3% and 12.7% (2014: 6.8%-13.1%). Fair value represents the price that would be received to sell an asset in an orderly transaction between market participants
and has generally been measured by using discounted cash flow projections based on the assets' highest and best use from a market participants' perspective. In 2015, the fair value less cost of disposal was the recoverable
amount in the determination of €2 million of the net impairment losses. In 2014, there was no impairment loss recorded based on fair value less cost of disposal measurement.
The additions to property, plant and equipment include capitalized borrowing costs of €1 million (2014: €2 million). Generally, the capitalization rate used to determine the amount of capitalized borrowing costs is a weighted
average of the interest rate applicable to the respective operating companies. This rate ranged between 2.3% and 3.8% (2014: 2.9%-4.2%).
Other movements mainly include transfers between asset classes and transfers to investment property.
The carrying amount of land and buildings includes amounts related to assets held under finance leases and financings of €987 million and €218 million, respectively (December 28, 2014: €843 million and €211 million).
In addition, the carrying amount of machinery and equipment and other includes an amount of €6 million (December 28, 2014: €4 million) relating to assets held under finance leases. Ahold does not have legal title to these
assets. Company-owned property, plant and equipment with a carrying amount of €48 million (December 28, 2014: €44 million) has been pledged as security for liabilities, mainly for loans.
million
2015
2014
At the beginning of the year
At cost
893
863
Accumulated depreciation and impairment losses
(333)
(320)
Carrying amount
560
543
Additions 15 11
Acquisitions through business combinations
5
Depreciation
(25)
(25)
Impairment losses and reversals - net
(3)
(9)
Assets classified to held for sale or sold
(20)
(38)
Transfers from property, plant and equipment and intangible assets - net
4
28
Exchange rate differences
49
45
Closing carrying amount
580
560
At the end of the year
At cost
934
893
Accumulated depreciation and impairment losses
(354)
(333)
Carrying amount
580
560
A significant portion of Ahold's investment property comprises shopping centers containing both an Ahold store and third-party retail units. The third-party retail units generate rental income, but are primarily of strategic
importance to Ahold in its retail operations. Ahold recognizes the part of a shopping center leased to a third-party retailer as investment property, unless it represents an insignificant portion of the property.
