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39
fifilUE3
Financial review (continued)
Adjustments to underlying operating
income
Net financial expense
Income taxes
Share in income of joint ventures
Income from discontinued
operations
Ahold at a glance Our strategy
Our performance
Governan
Financials
Investors
Ahold Annual Report 2013
Impairment of assets
Ahold recorded the following impairments and
reversals of impairments of assets (primarily related
to stores) in 2013 and 2012:
million
2013
2012'
Ahold USA
(75)
(36)
The Netherlands
(9)
(1)
Czech Republic
1
-
Total
(83)
(37)
1 See Note 3 to the consolidated financial statements for an
explanation of the restatements.
The impairment of assets in 2013 at Ahold
USA included charges related to the exit from
New Hampshire.
Gains and losses on the sale of assets
Ahold recorded the following gains on the sale of
non-current assets in 2013 and 2012:
million
2013
2012
Ahold USA
25
4
The Netherlands
2
7
Czech Republic - -
Corporate Center
1
10
Total
28
21
Restructuring and related charges and other
items
Restructuring and related charges and other items in
2013 and 2012 (as restated) were as follows:
million
2013
20121
Ahold USA
(88)
(85)
The Netherlands
-
31
Czech Republic - -
Corporate Center
3
(6)
Total
(85)
(60)
1 See Note 3 to the consolidated financial statements for an
explanation of the restatements.
In 2013, restructuring and related charges at
Ahold USA included €63 million of costs related to
reducing our exposure to our U.S. multi-employer
pension plans through negotiations with the New
England Teamsters and Trucking Industry Pension
Fund as well as a €23 million restructuring provision
related to our exit from New Hampshire.
In 2012, we wrote down €88 million ($116 million)
of capitalized software development costs at
Ahold USA. Ahold had been conducting parallel
implementations of a suite of retail applications in
the United States and Europe. Following a review
of our systems development strategy we decided
to focus our resources on the development of the
retail suite in Europe where we already had several
elements successfully implemented. In the U.S.,
we decided to focus on areas likely to provide
the greatest benefits, such as customer loyalty,
point-of-sale and e-commerce. In the Netherlands,
restructuring and related charges resulted from
a gain on pension curtailment (€36 million).
Corporate Center included acquisition costs
(€6 million) related to the acquisition of bol.com.
Net financial expense, at €291 million, increased by
€83 million compared to 2012.
Excluding interest income and expense on defined
benefit pension plans, net interest expense of
€218 million was €6 million lower than in 2012.
This was primarily the result of a weaker U.S.
dollar against the euro in 2013, and it fell at the
higher end of our guidance of €200-€220 million.
Net interest expense on defined benefit pension
plans increased by €41 million in 2013.
Other financial expense of €49 million was higher
by €48 million compared to 2012 and primarily
related to €35 million of valuation adjustments
related to notes and derivatives, and an €11 million
one-time adjustment to a financial liability.
In 2013, income tax expense was €153 million,
down €114 million compared to last year. This was
due to lower income, one-time transactions and
from movements in income tax contingency
reserves. The effective tax rate, calculated as a
percentage of income before income taxes, was
16.1% (2012 as restated: 23.7%).
Ahold's share in income of joint ventures, which
relates primarily to our 49% shareholding in
JMR, was €10 million in 2013, up by €2 million
compared to last year.
For further information about joint ventures, see
Note 14 to the consolidated financial statements.
The main contributor to the €1,732 million income
from discontinued operations in 2013 was a gain
on the sale of our 60% stakeholding in ICA of
€1,751 million.
In February 2013, we announced that that we
reached an agreement with Hakon Invest of
Sweden regarding the sale of Ahold's 60% holding
in Scandinavian retailer ICA for SEK 21.2 billion
in cash (€2.5 billion), which included ICA's 2012
dividend of SEK 1.2 billion. Ahold presented a
new growth strategy in 2011, and aims to focus the
execution of this strategy on businesses it controls in
order to create value. The transaction was subject
to regulatory approvals, as well as approval by the
ICA Retailers' Association (ICA Forbundet) for the
financing of the transaction, both of which were
successfully met in March 2013.
In November, we announced that we had reached
an agreement with Condorum regarding the sale
of Ahold's Slovakian business. Ahold carefully
reviewed its strategic options and decided to sell
the business as it has a limited market position
in Slovakia. An exit from this country enables
management to focus on the continued successful
improvement of our business in the Czech Republic.
The financial details of the transaction have not
been disclosed but are not material for Ahold.
The transaction is expected to close in the first half
of 2014, and is subject to customary conditions.
Ahold Slovakia operated 24 stores, with net sales of
€139 million in 2013.
