Financial review (continued)
Ahold Annual Report 2012 36
Ahold at a glance
Our strategy
Our performance
Governance
Financials
Investors
Share in income of joint ventures
Ahold's share in income of joint ventures, which primarily relates to our
60% shareholding in ICA and our 49% shareholding in JMR, was €81
million in 2012, down by €60 million compared to last year. ICA's
results were negatively impacted by a tax provision recognized by ICA
following an adverse court ruling (the impact on Ahold's results was
€90 million).
On September 4, 2012, in line with its aim to focus the execution of its
reshaping retail growth strategy on businesses the company controls,
Ahold announced that it was exploring strategic options regarding its
holding in ICA and had initiated a review that was expected to take
6-12 months. On February 11, 2013, we announced that we reached
an agreement with Hakon Invest of Sweden to sell our 60% stake for
SEK 21.2 billion in cash (which includes ICA's 2012 dividend of SEK
1.2 billion). The transaction, subject to regulatory approvals as well
as approval by the ICA's Retailers Association (ICA Forbundet) for the
financing of the transaction, is expected to be completed in the middle
of 2013. You can read more about ICA's and JMR's results in
Performance by segment.
Loss from discontinued operations
In 2012 and 2011, results from discontinued operations were impacted
by various adjustments to the results of prior years' divestments
(primarily U.S. Foodservice and Tops), as a consequence of warranties
and indemnifications provided in the relevant sales agreements.
For further information about discontinued operations, see Note 5 to
the consolidated financial statements.
Earnings and dividend per share
Basic income from continuing operations per common share was
€0.80, a decrease of €0.13 or 14% compared to 2011This
deterioration was primarily driven by impairments and restructuring
and related charges (in connection with the write-down of capitalized
software) as well as lower share in income from joint ventures.
The average number of outstanding common shares decreased as a
result of the shares repurchased under the €1 billion share buyback
program that we commenced in March 2011 and completed in
March 2012. The value of shares repurchased in 2012 amounted to
€277 million. The decrease in the average number of outstanding
common shares was marginally offset by shares that were issued under
employee share-based compensation programs.
Income from continuing operations per common share (basic)
2008
0.76
2009
0.82
2010
0.74
2011
0.93
2012
0.80
As part of our dividend policy we adjust income from continuing
operations for significant non-recurring items. Adjusted income from
continuing operations amounted to €1,044 million and €1,009 million
in 2012 and 2011, respectively, and was determined as follows:
million 2012 2011
Income from continuing operations 830 1,032
Add-back:
Frozen plan settlement (after-tax) 72 -
Write-down of capitalized software
development costs (after-tax) 52
ICA adverse tax ruling 90 -
Release of tax contingency reserve - (109)
Provision related to Vornado (after-tax) - 86
Adjusted income from
continuing operations 1,044 1,009
Adjusted income from
continuing operations per share 1.00 0.91
We reinstated our annual dividend in 2007 and announced that we
intended to increase future annual dividends while meeting the capital
needs of the business and maintaining an efficient investment grade
capital structure.
Dividend per common share (2012 includes proposed dividend)
We propose a common stock dividend of €0.44 for the financial year
2012, up €0.04 or 10% from last year. It represents a payout ratio of
44%, which is in line with our dividend policy to target a payout ratio in
the range of 40-50% of adjusted income from continuing operations.
Additionally, our solid balance sheet and strong free cash flow
generation enables us to launch a new 12-month €500 million share
buyback program.
