Group performance
-
-
-
Net financial expense
Income taxes
Operating income
Retail operating income
31 www.ahold.com/reports2008
Operating and financial review
In both 2008 and 2007, the majority of impairments related to store closures at
Stop Shop/Giant-Landover, primarily as part of the operating company's network
rationalization program.
Gains and losses on the sale of assets
Ahold recorded the following gains (losses) on the sale of non-current assets in
2008 and 2007:
2008
2007
million
million
Stop Shop/Giant-Landover
19
17
Giant-Carlisle
Albert Heijn
24
19
Albert/Hypernova
3
1
Total Retail
46
37
Corporate Center
(2)
Total
46
35
In 2008, the most significant gains on the sale of assets were the sale of a
shopping center at Stop Shop/Giant-Landover and the sale of stores at Albert
Heijn. Some of these stores were sold to franchisees.
In 2007, the most significant gains on the sale of assets were the sale of a
distribution facility at Stop Shop/Giant-Landover and the sale of stores at Albert
Heijn required by the Dutch competition authority following the approval of the
Konmar acquisition in 2006.
Restructuring and related charges
In 2008, restructuring and related charges of EUR 36 million related to Stop
Shop/Giant-Landover (EUR 29 million) and Giant-Carlisle (EUR 7 million),
primarily resulting from the lease termination of an office building used by Ahold
USA's IT organization. Restructuring and related charges at Stop Shop/Giant-
Landover also included store closure costs and a loss related to withdrawing
from a multi-employer pension plan.
In 2007, restructuring and related charges of EUR 40 million were mainly due
to store closures at Stop Shop/Giant-Landover and severance charges following
staff reductions across Ahold, primarily at the Corporate Center.
Net financial expense decreased by EUR 86 million compared to 2007, mainly
because of lower interest expense of EUR 83 million following significant debt
reductions in 2007 (EUR 0.6 billion) and 2008 (EUR 1.1 billion). Interest income
decreased by EUR 23 million compared to 2007, as a result of lower average
cash balances and lower yields. Net interest expense was EUR 234 million, down
EUR 60 million from 2007 and in line with our guidance of EUR 230 million
to EUR 250 million.
In 2008, income tax expense was EUR 225 million compared to a
EUR 153 million expense in 2007. The effective tax rate, calculated as
a percentage of income before income taxes, increased to 22.9 percent
(19.9 percent in 2007). The higher effective tax rate in 2008 was primarily
the result of changes in the geographical mix of earnings and a lower release
of tax contingency reserves compared to 2007.
AHOLD ANNUAL REPORT 2008 12
08
1,198 5.0%
07
1,068 4.9%
06
989 4.8%
05
77 4.6%
04
819 4.9%
*Retail operating margin
2008 2007
2008 2007
€m
€m
Stop Shop/
Giant-Landover
485
37.5
486
40.0
Giant-Carlisle
160
12.4
156
12.8
Albert Heijn
648
50.0
573
47.2
Albert/Hypernova
1
0.1
0
0.0
