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Income


Tax

Our year-to-date effective tax rate was 26 percent (2008: 31 percent excluding the impact of the impairment of goodwill/ intangibles and derecognition of deferred tax assets). In Q3, we received €75 million on a contingent basis as part of ongoing tax litigation. We recorded a net gain of €57 million on the tax line. Several other adjustments have been made with regard to tax liabilities from prior years. In addition, we recorded several tax-exempt or low tax gains, such as the PTA Pakistan divestment, as well as some incidental non-deductible expenses. Excluding the incidental items and prior years adjustments, the year-to-date tax rate would have been 29 percent (2008: 27 percent).

EBIT in “other” in € millions

 

 

 

 

2008

2009

 

 

 

Corporate costs

(128)

(99)

Pension costs

20

31

Insurances

(13)

(9)

Other

(37)

69

 

 

 

EBIT in “other”

(158)

(146)

The “other” category

In the category “other” we report activities which are not allocated to a particular business. The 2008 figures have been restated and are lower due to a number of special items related to the ICI integration and a new corporate cost allocation method. Corporate costs are the unallocated costs of the AkzoNobel head office and shared services center in the Netherlands.

The corporate costs showed a considerable improvement on last year due to restructuring and cost-saving programs. Our captive insurance companies generated an overall result better than the previous year, which also included a number of general product and liability claims. Other costs included, among others, share-based payments, the result from two small businesses and some holding companies, treasury results and legacy operations.

Economic Value Added (EVA)

EVA is calculated by deducting from net operating profit after tax (NOPAT) a capital charge representing the cost of capital calculated on the basis of an average return investors expect. The elements of the EVA calculation cannot be derived directly from the financial statements, as it takes into account certain adjustments such as the amortization of incidentals to capital. EVA for 2009 totaled a negative amount of €492 million (2008: €1,723 million negative).

Dividend proposal

We will propose to pay a total dividend of €1.35 per share to the Annual General Meeting on April 28, 2010. An interim dividend of €0.30 per share was paid in November. Our dividend policy is based on an annual pay-out ratio of at least 45 percent of net income before incidentals and fair value adjustments for the ICI acquisition. This proposed full-year dividend of €1.35 per share represents a 57 percent payment under our policy.

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