Ahold Delhaize has published pro forma combined financial information following its recent merger, which indicates a restated combined net income for H1 2016 of €656 million.
The combined information also shows underlying operating margin standing at 3.6% for H1, 20 basis points lower than what was reported historically.
Net debt was €700 million higher, at €2.7 billion.
Commenting on the figures, Barclays European Food Retail Equity Research said, 'As expected, there is a significant increase in the depreciation charge because Delhaize’s assets were revalued up. The point we identified in August as somewhat counter-intuitive is the increase in net debt (c€700m), which happens because the market value of Delhaize’s debt is higher than its book value.
'This makes Ahold Delhaize’s net debt look €700m higher than simply adding the two companies’ net debts together – but the increase is purely notional. The other side effect of this is that the accounting rules mean that the notional debt increase gets amortised through the P&L over the remaining life of the debt – i.e. as an offset to the interest charge.'
Barclays also noted that 'With the exception of the “remedy stores”, all these changes are non-cash – even the increase in net debt'.
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