Koninklijke Ahold Delhaize N.V.

Henk Jan ten Brinke - Vice President of Investor Relations Dick Boer - Chief Executive Officer Jeffrey Carr - Executive Vice President and Chief Financial Officer

Patrick Roquas - Rabobank Sreedhar Mahamkali - Macquarie Research John Kershaw - Exane James Grzinic - Jefferies & Company Andrew Green - UBS Gerard Rijk - SNS Securities Richard Clarke - Bernstein

Thank you, operator. Ladies and gentlemen, good morning, and welcome to our second quarter analyst conference call.

I am here with our Dick Boer, our CEO; and Jeff Carr, our CFO. And after a short presentation that is available at ahold.com, we will have a Q&A session.

So with that over to you, Dick.

Thank you. Ladies and gentlemen, welcome for joining our second quarter conference call.

Let me start by giving you the highlights of the quarter. We had a strong quarter and are pleased to report sales number of EUR 8.9 billion, which is up 3.1% at constant exchange rates.

And adjusting for the lower gas sales even better growing at 4.8% versus 8 - versus quarter two 2014. After the previous quarter where the margin was impacted by a few one else [ph], we are this quarter reporting a strong underlying margin of 3.8%.

Free cash flow also remained strong at EUR 367 million and Jeff will give a bit more detail on this later on. We are particularly pleased with a sales performance in the Netherlands with a strong performance at Albert Heijn, driving transactions and volumes.

I’ll tell you more about that later in the presentation. In the Unites States, we continue to work on improving our customer proposition to improve quality and value which were largely fund our simplicity savings.

In an ongoing tough competitive environment, we gained volume market share for the fourth consecutive quarter. Our online business reported 22.8% net consumer sales growth at constant exchange rates, which includes plaza sales at bol.com.

Our ongoing investments make us confident that we are on track to meet our 2.5 billion net consumer sales target by 2017. And last but not least, we announced on June 24, our intention to merge Delhaize.

We are very excited about combining our two highly complementary businesses providing value to all stakeholders. Let me now hand over to Jeff, how will take you through our second quarter numbers in greater detail.

Thank you, Dick, and good morning, ladies and gentlemen. As Dick mentioned, net sales in the first quarter were EUR 8.7 billion, up 3.1% at constant exchange rates.

And when taken into the account, the stronger dollar in the currency effects, sales at actual rates were up 17.1%. We continue to see low gas prices in the U.S.

So excluding gas, grocery sales were actually up 4.8% and this reflects a good overall performance across all of our businesses all be at helped in the second quarter by the effect of the timing of Easter which if you recall had a negative in the first quarter. Underlying operating profit of EUR 331 million in the quarter was up just under 2% at constant exchange rates compared to last year.

Now underlying operating margin was 3.8% in the quarter, that’s 10 basis points lower than last year, but up 30 basis points when compared to the first quarter, which if you recall included some specific one-off items which impacted the margin in Q1. Operating income in the period was EUR 301 million which is 41 million higher in the last year.

An operating income for this quarter included the restructuring charge of EUR 18 million related to an early retirement incentive program of Giant Landover for store associates. Additionally, it included EUR 11 million of costs related to the announced merger.

Net income was EUR 195 million which is 48 million higher than last year. This reflects the higher operating income I mentioned but also in the same period last year, we included some additional charges related to the Waterbury litigation.

Moving on, let me briefly talk about the performance by segment starting in the United States. In the U.S.

we continue to invest in our initiatives to improve our customer offering. And this resulted in the sales growth excluding gas of 2.1% at constant exchange rates and identical sales growth of 1.8%, again helped by the timing effective Easter.

As I have already mentioned, the total sales numbers effected by lower gas prices and that resulted in the total decrease of 0.3%, a small decrease of 0.3% compared to last year. At Peapod, we saw some improvement in our sales growth with sales increasing to just under 10% compared to mid-single-digit growth numbers in the first quarter.

As I previously stated, we believe revenues at Peapod will continue to improve through the rest of the summer and into the fall as we see extra capacity coming online at our New Jersey facility. In the U.S.

the underlying operating margin increased by 20 basis points to 3.9% resulting from continued strong cost control and the benefits from our ongoing simplicity program. And well lower gas sales had a slightly positive impact on margin.

This was also offset by lower reimbursement rates related to our pharmacy business. To moving on to the Netherlands, we had a very strong sales period.

Total sales grew by 6.8% and identical sales were up 3.4%. Albert Heijn performed very well again this quarter with strong commercial programs and improvements to the assortment which Dick will cover a little bit later.

And Albert Heijn market share was positive compared to last year and volumes grew due to increased transactions and higher basket size. Additionally, our growth initiatives continue to perform well, for example our e-commerce businesses in the Netherlands, bol.com and Albert Heijn grew by over 30% in net consumer sales in this quarter.

And our Belgium business continues to perform well as we add new stores. Including bol.com, the margin of the Netherlands was 4.5% and this is 50 basis points lower than last year.

This is in line with our expectation reflects the additional investments in online and the increased pension costs result of lower interest rates. And if you recall, we gave specific guidance on this on February and this remains unchanged.

Excluding bol.com, the margin in the Netherlands was 5% which is in line with last year after adjusting for the pension effect. Sales in the Czech Republic grew by 30.2% at constant exchange rates, driven by the acquisition of the 49 SPAR stores obviously in August of last year.

Identical sales were strong in the quarter, up 2.1%. However, please note as of next quarter, the identical sales numbers in the Czech Republic will include will be impacted by the inclusions of the SPAR stores.

The underlying operating margin for Czech was down 100 basis points to 1%, but this did include some nonrecurring costs of around 2 million relating to the acquisition. Now, we continue to deliver a strong free cash flow in the quarter of EUR 367 million, this is EUR 297 million higher than last year.

The growth in free cash flow was partially due to the timing effect of Eater which had a positive impact on working capital. Additionally last year, we had some specific one-off tax charges and consequentially tax costs this quarter are lower than last year.

For the first half of the year, our cash flow was EUR 553 million, a 181 million higher than last year. However, we do anticipate higher capital expenditures and higher cash tax costs in the second half of the year and therefore for the full year, we expect our free cash flow to be broadly in line with last year based on current exchange rates.

So thank you and now I will hand back to Dick.

Yeah, thank you very much, Jeff. And let me take you through the business highlights in this.

You can see in our presentation, I would like to go through a couple of our markets and highlight some of things we mentioned already on the slide, so we’ll be brief on it. But first of all on the U.S.

slide, let’s start with the United States. We came to an agreement with A&P to acquire 25 supermarkets in the New York Metro market.

As a condition of agreement which is subject to go approval, as you probably known, we are currently number two in the New York Metro market and see this as an excellent opportunity to strengthen our position there. On the slides you can see the main elements of the transaction that is lightly to close in the last quarter of this year.

As also mentioned in my introduction, we continue to work on improving our customer proposition our four divisions. Wave one then you read about it on the slide also is completed.

Wave two, introducing super KVIs in each store in on track and will be completed next year. We have rollout another 92 stores was a complete new produce department offering a much more attractive layout, signage, more choice bringing the total now on 167 stores.

And this is not only the choice and the sign of it also the customer engagement of all our employees has been made the big step forward in this produce department by training and education. The program is on track and will also be completed next year.

Our growth in volume market shares prove that our customers reward us for offering better quality and values to them. Now let me talk also about a very interesting example of exchanging best practices within our group.

The version of Albert Heijn Allerhande which is the largest and most well consumer magazine in the Netherlands free for our customers with recipes and other foods related topics has this quarter been introduced to our U.S. banners both in print and online, so immediately also in rick platform under the name of Savory.

The work helps customers to make healthy choices into the day diets and inspire them to cook fresh healthy and delicious meals. A great success are really to combining efforts we have on the globe of our consumer insight and consumer proposition and to share the knowledge between the two companies through two side of the oceans and in this case between Allerhande and Albert Heijn.

Now let me turn to the Netherlands on the next slide. Also Albert Heijn had successfully introduced a lot of new Albert Heijn products and concepts especially in fresh.

This offers the customers more local and region products, more appealing packaging, less plastic were possible. An addition, there is a possibility to check the origin of certain food and vegetable by scanning the label on the product.

So really steps forward in engaging our customers again. Just few examples of our developments at Albert Heijn assortments you can see on the slide.

With further expanded and improved are already extensive product range of salads and have now groups in together for a convenience of our customers, a lot of innovation also in organic and of course also in this case on ASC-certified, so produce sustainable products in this case our aim to make all our brands, our own brands more sustainable as we have given to the markets until the end of this year. And for incidence, salmon is a great example where we also are making the big progress of sustainability.

It’s in the interest of customers healthy and sustainable choices is very improvement. Also this - the recent announcement around the development of Albert Heijn online and in this case, the introduction of the Allerhande meal box, this is a service for our customers where you get all the ingredients and recipes for three meals in one box.

Delivery is included in this fee and what is particular interesting is that our customers can combine it at the same time as more than 25,000 products from our Albert Heijn is now delivered to their home or at one of our pickup points. This unique concept is immediately available when we start to launch things with 35% to 85% of the households and I am sure we but also they are very excited about it, the customers.

On the next slide, I would like to put some highlights on bol.com. Bol had another very successful quarter, growing traffic, number of orders and average order value significantly.

And as you can read on the slide here, net consumer sales was up more than 30%. Electronics partly but relatively new categories as home improvements and gardening and especially seasonal products now for the summer are very successful launched by the campaigns we had over the last year and certainly also attracting the customers to do shopping online during the summer season.

The number of transactions were up more than 25% and additionally we saw strong increase in spent order. Year-to-date, bol.com had 4 million unique customers which is 70% higher than last year’s same time also Belgium which even showing increase of customers sales, consumer sales there of 75%.

As we explained in our online strategy update last year in November, we’ll continue to invest in the business supporting future growth. We invest in marketing, improving our websites and we keep growing our sales in our new categories and adding Plaza partners expanding bol.com as a leading known food online retailer in the Netherlands.

This quarter also bol.com started offering same day delivery if you order before 11:00 a.m. you can pick up your order after 5:00 p.m.

at the nearby Albert Heijn store at a modest fee of EUR 1.99. I’d like to go to the next slide, before I spend a few words on our intended merger with Delhaize.

Let me share a few highlights on our Czech business. Our latest store concept for our supermarkets which we call favorite is creating improved sales trends as you may have seen in the numbers we published today.

And it’s a comprehensive program, empowering associates, delivering better service to our customers and improving the layer to the stores, who have recently completed the rollout. Although we saw a smooth transition from the SPAR supermarkets into the Albert brand, we are undertaking targeted store initiative to continually improve the performance of the larger formal SPAR stores.

Team over there is working very hard to impact some of the loyal SPAR some of we have lost in rebranding into Albert. So before we open the floor for Q&A, a few words of this exciting topic as you can see on Slide 10.

I’ll not take you through everything that is on the slide but let me just pick up a few elements. The combination will operate strong local brands as market leadings positions in complementary neighboring geographies.

Substantial synergies at a run rate of 500 million year-over-year will lead to a significant value creation within the business. And a strong cash flow generation will allow us to invest in future growth as well as delivering an attractive return to our shareholders.

We believe that we will create a balanced government structure and all the less will have a management team focused on delivering those synergies, making this a compelling value proposition for our shareholders. And although I understand that you probably have some questions related to the merger with Delhaize, today I can only say that we are on track and our pleased with the progress we are making.

As previously communicated, we expect to have an AGM in the first half of 2016 and transaction to be completed mid-2016. And we are look forward to an exciting future together.

So I would like to leave it with that for today with our presentation and give you the opportunity to start with the Q&As.

Gentlemen, thank you for the presentation. Couple of questions of Albert Heijn, we saw an acceleration in ID sales growth partly held by a positive Eater effect that was there in the quarter, a negative effect from let’s say last year at the start of the World Cup which I remember had a positive effect?

That’s the first question. Secondly, you’ve indicated some improvements you’ve made in the assortments and you indicated some commercial promotions which you comment and have you seen price perception improving in the first half of the year?

And then finally, I know part of Belgium is including in your ID sales growth, is there an indication for the rate that you are growing on an identical rate in Belgium? Thank you.

Thank you, Patrick. Yeah, on the World Cup, you look the World Cup last year was certainly having some impact on the quarter sales of Albert Heijn is very limited I would say, so not very significant I would say.

So because there was a lot of campaigning around the World Cup as we all remember, so I wouldn’t say there is a huge negative effect are positively done going forward. On the improvement of the assortment and the other questions you raised on price perception.

Yeah, which is some slight improvements on the perception of the proposition of Albert Heijn as well on price but also in other metrics, so assortment, ranging, health products, quality, so clearly we’ve seen that the customers acknowledge the improvements we are making in our stores and also the improvements we are making in the ranges and in the categories. And I think it’s all about focus on much more I would say in our case also the categories around fruit and veg produce, salads as I mentioned but also organic and innovation of new product.

So a faster speed of innovation I think in the - in own brands is certainly helpful also to correct the engagement of our customers. And on the Belgium market, the identical of Belgium, as you may recall, last year we had a big step up in identical sales of the Belgium market, so we are countering that first half year last year was very successful, so clearly there is not a big different between identical on Belgium as knows.

Patrick, I might just add. It’s Jeff.

I might just add on U.S. specifically on promotions, we did have incremental promotional spend in the first quarter but actually the promotional expenditure at Albert Heijn in the second quarter was more in line with last year that was nothing specific on the promotional activity.

But I think what we are looking at is more effective promotions, which we’ve been running and whether that’s the team promotions just have specific price tag and but more effective promotions in the second quarter than last year.

Okay, thanks a lot.

Yes, hi, good morning all. Three questions please.

Firstly, if I look at the shape of the P&L and Jeff actually if you help, you talk about improving profitability probably stable profitability in this quarter driven by SG&A savings, but the P&L seems to stay the opposite that is to say higher gross margins were largely offset by higher SG&A. Is this larger an FX issue or is that something else going on, if you could just clarify that and that would be very helpful?

And secondly, you continue on the margin, in the U.S. it is clearly a breaking trend of and probably six quarters of margin decline now, is it a case of simplicity over delivering this quarter of is there a kind of systematic upgrade to its magnitude such that we could actually see trading perhaps over the next few quarters?

And finally staying with the U.S. I think your competitor seem to be talking about experiencing deflation, while you are talking about inflation in your numbers in the quarter.

If you could just give us an idea perhaps what might be different, is it the regional mix in your case that’s causing this delta and that would be helpful? Thank you very much.

Well, I’ll start with the issue. I don’t think we specifically said the P&L benefit is from lower SG&A.

We said from simplicity improvements which put across both SG&A and our cost of goods. But certainly FX and also the gas effect on - has an impact on gross margin, the lower gas had also has an opposite effect on SG&A cost.

On the bottom line, the improved - the gas effect on margin isn’t significant but it does have an effect on gross margin and it has an offsetting effect the lower gas sales and an offsetting effect on SG&A. You ask about U.S.

margin, I don’t particularly think that we’ve been seeing margins decline in fact over the last since we started the investment program about a year and a half ago, I’d say margins have been pretty consistent just on the 4%. We’ve had a couple of quarter where it’s been a bit lower, but we’ve been guiding the market.

And I think the consensus out in the market, we’ve repeated in our overall outlook that we’re comfortable with. And that obviously has an impact on the U.S.

which is a big part of that operating market. So we’re comfortable with the outlook in the U.S.

and I think margin will - to remain stable in line with the expectation. And I think on the inflation, something I can now markets in the Northeast we’re seeing some food inflation.

The average across the market is just under 2%. Our own average inflation was significantly less than that around just over 1% in the quarter.

And again that’s a number which both of those numbers fairly consistent with the first quarter and I can’t really comment on what other retailers are seeing in different markets, but that’s something were we are in.

If I can just quickly come back, in terms of the simplicity, directionally how should we think about, what part of the savings could be sitting in cost of goods versus SG&A percent proportionately will help, because it’s the first time in a couple of quarters I am seeing gross margin going up, so perhaps that explains some of the background?

Yeah, we showed I think quite a specific chart at the end of February with a full year results and I believe the percentage in margin in basically our direct cost was around 60% of that simplicity savings with the remainder obviously been an operating costs. So a significant proportion of it is in improving promotional effectiveness and reducing our cost of goods through better design of through better negotiations and set forth.

Okay, so the way you are seeing the gross margin is largely down to simplicity a little bit from gas and perhaps FX, is that constituent?

Yeah.

Got it, thank you.

Yeah, good morning, guys. Just gone out, just quickly follow, I think as you have strict line, I think that your gross margin could be down, so perhaps you just comment on that given a trend sort of an increase.

But bigger picture, in terms of the U.S. what - the recoveries coming through, but it’s fairly delight in terms of you currently the Easter impact, so can you pin order recovered view might just like in terms of sticking momentum in the U.S.

and what would be required for you to return those stable margins? And then secondly, just sort of helping manage expectations, we - you will have known in good part the market basket a strike store closures from last year, so should we be expecting a negative like-for-like in the third from the U.S.

so are there other facts that come through for your remaining in positive territory? And then secondly, just talk to the macro backdrop you are seeing in the U.S.

and the Netherland, are we seeing improvements or our consumers still constrained? And finally just expand them why you don’t think free cash flow will grow in the - after very strong first half.

I know you mentioned the higher tax cost perhaps we can expand a bit more of that?

Thank you, John. I think Jeff will come back to the gross margin and cash flow the developments, your questions were focused what I understood on the economic environments in the U.S.

and the progress we are making in the U.S. on our programs, I think I that was one of the question you raised is it - do I miss something there?

The big picture is just what is recovery like in U.S.?

Yeah, and then the like-for-like I think the impact on the market baskets there for the third quarter which of course has an impact last year and on the positive notes to our quarter. On this quarter I think it was 140 basis points we needed to which we flagged last year.

So we have to take it into account for the quarter expectations of this year for the third quarter.

You’ve already lacked and then you’ve tried again sales comps in the main, so you probably with more clarity can say whether roughly 140 basis points of an underlying basis half to 1% ID sales, so just you should have a negative like-for-like in the third quarter, just trying to help manage expectations potentially?

Well we are giving - I think we can say a 140 basis points, it was the effect in the third quarter last year positive and we’ll see the offset in quarter three, but we’re going to give a specific guidance to quarter three like-for-like but you are right to flag it, it was a significant event with most of the stores empty if not closed and it was a significant Q3 event which gave us a significant benefit which we’ve flagged last year and have a well setting effect this year. So you are right but I am not going to give a specific guidance to what we expect and underline.

I think what we said is strip and out those effects, we would expect to see the overall trend improving as our program develops.

I think that’s on the fact on your previous question on the economic environment and the program. I think our program is developing well in the U.S.

of course if you look through the numbers in second quarter for the four quarter in a row volume share growth in our market, so I think that’s clearly telling us that the program we have installed for the U.S. is supporting market share growth in volume.

We see that also backend customer reaction, in customer perception and of course difference in markets. So I have one market is more advance already on that and the other with clearly this clearly the program is helping us to drive the customer perception is a good direction.

And again we are let’s say when we look at the program how it’s rolled out and all the effects we are seeing, we really believe it’s a right way for a trail. It takes time, we all know that, but clearly a good direction on the economic and in the U.S.

I don’t think that’s been whichever when will, there is of course an advantage of the oil price going down. So in the spending of course of customers and we’ll see that clearly during the second half of this year when the energy builds hopefully will go, so as the current oil price that customers at least see some more money into your wallet.

Of course sentiment is still fragile I would say or volatile and it’s still affected by a lot of incidence around the globe. And but on the other hand, I think if you look at customer sentiment in general, you see some positive outlooks from both side of the ocean and that’s helping us because we are supermarkets where I would say quality and value is going hand on hand and clearly in the Netherlands second quarter shows that Albert Heijn, there is not more transactions and a little higher and probably and clearly creates again more customer traffic and higher sales.

So that’s I would say on the customer sentiment. And I would say customer sentiment is one but let’s all forget because otherwise the customer sentiment the activities we are undertaking all our markets if you go from Czech to U.S.

is really our own initiatives which are helping now to drive sales and I think that’s more important.

I think just going back to your first and last question John, yeah if you strip gas out of the P&L, gross margins are slightly down, so you could - if you wanted to do that, if you strip gas out, it is pretty flat to be honest in terms of overall gross margin. And free cash flow, yes we were guiding to the number for the full year to be slightly were to be in line with last year and clearly we are headed the half year.

But as I mentioned, I expect capital expenditures to increase in the second and certainly within our guiding with CapEx, we can cover any CapEx related to the A&P stores if that is completed which we expect it to be in the second half. And as I mentioned the cash tax number in the first half is being particularly low and that will increase in the second half as well.

Okay. Just quickly, what CapEx you are guiding to is a moment then?

Yeah, we set around 900 million was the full year CapEx expectations.

Thank you very much.

Thank you. If you look at the number in the first year, it’s less than 50%.

Okay, thanks guys.

Yes, good morning. Just question on the USD, the first one is [Technical Difficulty]

Yeah, I think probably on this that was so easy to say we’d take 20 basis points of margin we invest and get a bit of extra volume. I think it’s just not that - it’s just not that, there is a lot more moving parts to it.

I think the investments we are making in the U.S. would be significant in terms of the price investments that’s being funded by big simplicity program and we’ll continue to drive simplicity and we are seeing it come through, those investments are coming through in terms of improvements in price perception.

But you are right, if you look at it just quarter-on-quarter, for the total U.S. you are seeing an overall improvement.

We are seeing much better numbers as we talked about before in Giant and New York, but certainly the land of the market remains a challenge. All be it, we are seeing good science and good improvement.

It still remains a challenging number in terms of identical sales performance and obviously Peapod know where we like it to be. But quarter-on-quarter, adjusting for Easter, there was no total significant improvement in identical sales.

But I think one quarter on one quarter is fairly short term view as a world and we have to look at the negative IDs we are having in 2013 and 2014 and the overall development is positive when we remain upbeat adjusting for the impact of market basket for the outlook for the rest of this year.

I think that also covers a little bit. I think you went on very loud, but I think the second of the question was is any other comments on the performance?

Yeah.

Yeah, I think you also asked about the volume that we have to also acknowledge that the market is not growing at all, so there is no volume growth in the market in U.S. in our part of view.

So we are in an area then we will see clearly we of course less supported by population growth, much less than the rest of the U.S. of your Southern part.

So clearly the total markets not growing at all, so that’s my - we are outperforming the market by even the low sales identical you see today which is of course partially also because we are using prices and so price is down, promotion balancing, so at the same time, we created fully market share growth in a markets which we are growing. So at least the positive sign is we are saying.

And on the individual market, I think Jeff alluded rates that rates that’s clearly New York and driving the growth in the banners. But we’ll see positive signs on the work we do in New England and we see also clearly in the Landover market where so much expansion is in that our plans on at least helping us to defend our position better than before.

Okay. Beside the opening that you’ve seen against the Giant Landover, have you seen some changing pricing activity in some of your market?

No, what I think when is good is that we have been let’s ahead of all the changes of course in ownership in the Landover market and the competitive owner, but we had two let’s say big changes in ownership by grower and of course and savory, but we have been ahead of our wholly positioning of these event. And I can tell you if you at shelf price for shelf price or basket by basket, you are much cheaper out for Giants source and then our major competitors there.

It’s also of course acknowledge of the customers, there is a lot of competition out of newcomers in, well might recommends but clearly our positioning is good, I would say much better than two years ago. So I am personally believe that the things we have done is helping us now also to defend and to be and also more offensive at the end of the day.

Okay, thank you.

Yes, good morning, thank you. I had a couple of quick ones, really the first one is, can you perhaps explain how effective a competitor A&P was through Q2 and now, I presume it’s looks like supply is pulling delivery to the stores very early on before bankruptcy some be interesting from the strand, much benefit of that?

And secondly, can you perhaps clarify why now that you seem to have sort of back a little on the promotion or investment in Holland, you are not getting the post of leverage of that grade into market, what is that going to, where is the positive going into, is it cause or you doing something else from pricing. Thank you.

I am in second one, Jeff will take it on the A&P side. Of course we have in A&P over the last year, so even in the bankruptcy also before that is already that the investments we are doing on the proposition was very limited.

And so I wouldn’t say that this has been a dramatic change of the last couple of months versus the whole year.

But there has been a great support dynamic I would guess, that would be fair?

I would say - I wouldn’t estimate it as a high - on a much higher number as before. I think looking at our development over the last two years already, we got the benefits from weaker competition in the market.

And of course what a final outcome of the bankruptcy discussion is still unclear, so let be also on us. We did a dib on - we put our bid in for 25 stores, what the outcome finally will be, we will have to see, still see how many stores will take by others.

So there is lots of clarity still on this deal - on this total situation of A&P.

And just in terms of the margin, we do actually see the Albert Heijn still margin improvement in the second quarter as we had particular impact of promotional spend in the first quarter. The total NL margin is about the same but we’ve increased - we saw increased investments involved in the second quarter.

So there is a lot of moving parts and but basically we do see that benefit coming through Albert Heijn stores in the second quarter or be at some degree offset by the actual investments in this quarter relative to the first quarter.

Okay, thank you. I was just confused.

The underlying Douche margin was flat [indiscernible]. Yes, alright, so your comments was purely sequential rather than earlier.

Okay, got it.

Yeah, sorry James, you were asking why with less promotional spend this quarter than last quarter, we didn’t see a margin improvement in the Netherlands, well we get in the stores but it was same ball in this quarter versus last quarter.

Yeah, sorry, I meant even the promotional reduction relative to Q2 last year I would guess not only Q1 this year but - okay, thank you.

It’s marginal versus last year, it’s a little lower than last year.

Got it. Thank you.

By the way, the change to improve price positioning versus major competitor so it’s also work on there, so let’s be clear on that.

Thanks.

Yes, good morning gentlemen. Two quick questions from me, one on the U.S.

and the margin, just a clarification. So you said that you expect margins to remain stable over the second part of the year, I think you just published 3.9% on that consensus is expecting rather 3.7 or just a touch below that, so are you expecting some of sideways consensus expectation for the full year?

That’s first question on U.S. And then the second one on net financial expenses, I think so far you are running something like 8 million above last year and to pension and that consensuses expecting something like 230 million so slightly down year-over-year, could you provide us a bit more indication on what we should be expecting for the full year?

Sorry, could you just repeat the second part of the question?

Yeah, so I think consensus you are expecting 230 million for the net financial expenses this year, could you provide a bit of color on what we should be expecting for the full year, please?

Okay in terms of - with the U.S. margins, I think what we said is U.S.

margins have been running relative stable just under 3% over since we started the program of the investment program over the last 18 months, so I wasn’t particularly making a specific statement about - specific guidance to the second half of the year. Overall total company guidance is that we remain comfortable with the expectation and that’s what we say in the outlook and I wouldn’t really like to enter that.

So the relative delta in terms of 37-37 is pretty small swing, so I wouldn’t get any particular refinement of that. So the only statement that we make in the outlook is that we are comfortable with market expectations.

And in terms of the U.S. the margins overall have been relatively stable.

I think we were making the comment that John from back to - made that the margins have been down over the last six quarters. But I think if you look it on average that been relative stable, since we made those investments, making those investments and we remain comfortable with that.

I think the guidance on net financial expenses is around 200 - interest expense of 205 million to 2015 million as what we’ve said. In terms of net financial - total that’s the interest expense.

In terms of total financial expenses, we expect the full year to be a little higher than that around 260 million.

Okay, very clear. Thank you.

I apologize I come to question just, I mean you think that you are happy with consensus, yeah this quarter I think it’s about 5% ahead of consensus, it sounds like is there almost a bit of downgrade in the second half or you just being cautious for the second half? And then just helping us on the models, where is the margin of bol.com, presumably if low single digits, but some - could you even ahead toward the losses?

Bol is positive at a EBITDA level, it is negative at an EBIT level as we’ve been increasing our investments in bol and knows increase investments are very well controlled and they are resulting in what you see which is consumer sales number of over 30%. So we are happy with the investments we are making with bol and the delivery of the growth that we achieving.

We bought bol at with a business sales number of just over 300 million in 2012 and it will be close to a run rate of around a billion by the time we finish 2015 in terms of consumer sales. So I think we are happy with that growth rate, we are happy with the investments we are making and we can observe those investments and deliver strong group results.

And I think that’s the right steps to take. So in terms of expectations at bol, on an EBITDA basis, it will be above breakeven this year, slightly positive, but which mean at an EBIT level obviously it is slightly negative at an EBIT.

Just coming back to the guidance just to be clear, we’ve been consistent with our guidance, the statement that we make in our outlook is the same statement that we put in at Q1. We are not changing or adjusting our outlook for the full year.

We are - we’re slightly in terms of our expectations in the first quarter, we are upside in terms of our expectations in the second quarter. So I don’t have much more to add to that but we’ve been consistent in the outlook and we are changing.

You sort of opened the door of it on the bol.com, what is the profitability because by those numbers typically you get the more you are - the more the loss increase.

No, I - not at all, the investments that were specifically making this year, we talked about in detail in November, so we’ve increased specific investments in areas to achieve specific results. Clearly we can reduce those investments when we’ve achieve the results we expect to achieve.

So for example we are going through a period of building awareness in many of the new categories that have been launched. I think we have launched if you go back again when bol - if you look at bol in 2012, it was dominated by the sale of books and small consumer electronics and entertainment.

We now launched I don’t if it’s 12, 13, 14 different categories covering something like just under 10 million SKUs to develop bol into pretty much all know food areas with the exception of fashion, now clearly we have built awareness in those categories so we took a decision last year to increase the marketing spend to specifically awareness. We are also doing accelerating work to improve the quality of the store in bol website.

So those types of investments are not permanent investments and obviously we will reduce overtime and we will get this leverage in terms of operating expenses as we grow in scale, so the packed profitability is very clear. Now how long we keep those investments going if can continue to grow it over 30% of consumer sales, I am quite happy to make those investments.

We are building a world class nonfood e-commerce player which is growing quicker than the rest of the online market in the Netherlands and continue to grow in the - not just the Netherlands but also - and it’s a very important asset to us. We are very pleased with the performance of bol and the growth rates and we are happy with the investments that we are making in delivering the returns we expected.

And presumably on those of legacy catch frees if you will, that the profitably is still lad, this is simply expansion, or maybe building awareness?

Absolutely and but ye way those legacy categories continue to grow, so surprisingly and I think when if you look at long term thinking we would have seen some contraction of things like books but they continue to grow, we continue to improve our market share in books and those other areas and they continue to be very important but obviously a much smaller part of them much bigger company now, but the mush broader spectrum of nonfood sale.

Okay, thank you.

Yeah, good morning, thank you for taking the question. Follow-u p on this bol.com issue, I understand your full year guidance on that on the margin dilution, it probably seems a little bit stronger than expected growth at bol.com and Albert Heijn online, should there not be a little bit of more of positive leverage impact because of course your investments were already decided earlier for this quarter, so that’s my first part of the question, first question.

Second question is one the your statement on Czech Republic where you say okay this part will come into the base taking to account that will affect the identical sales, is that positive or negative that effect in the third quarter?

Maybe start with the last one, Czech that will have a negative effect because last year where we took over this past stores, we of course we are staring a lot of campaigning around reopening and of course pushing the store base up and that will cycle into the now let’s say running stores on a longer period of time, so we’ll clearly have some negative effect from our identical store the quarter is coming. And secondly also what we said, we are doing with our supermarkets, so really all the signs are green there as well from these past stores as well as our own Albert, but clearly on the Interspar Compact Hypers which we opened and rebuild to Albert, we are still fine tuning the right ray forward for the stores and that makes also that when they are taking identical that will have a negative effect.

On bol, and clearly by the way didn’t surprise us that we grow so fast because we gave the opportunity to invest in marketing but also improving their categories and the category performance on the website. And I think was the bounce we have, we continue to believe that will be in the same margin guidance on the illusion which we gave earlier this year, because there is also some, let’s say some investments going continue of course and we gave them the opportunity within that bandwidth to invest and yes they get a benefit to spend even a bit more now the growth is going to faster, so it’s good news.

There is - just on the question on leverage, we do see a bit of leverage from the highest sales numbers of bol, but that and the total Netherlands is not a significant impact in terms of the - is on the profitability in the total Netherlands.

Okay, thanks very much.

Hi good morning everybody. And just two questions from me, firstly when you said New York as an opportunity and you are number two there, even when you bring in the 25 A&P stores, you are still number two, so what’s the pathway to get to being number one in New York, is it more or just organic growth?

And then the second one is on Peapod, Q1 you said there is constraints and you to get better in Q2 and then better again into Q3 and Q4, you still expect those improvements in the second half of the year for Peapod?

The last question, we continue to improve our performance of the warehouse so the capacity constraints is coming back more or less form the fact that we were at difficult is to get our let’s say warehouses running, so a lot of support of the ones we contracted the mechanization and automation over the last couple of quarters to start improving quality of delivery and we can do in the warehouses. So clearly that’s our expectation, second quarter clearly was also better than the first quarter on identical sales growth in people.

I will still believe we can go back to double digit for the full year. On the maker there, you are right, we are still second and we have to continue to work hard including of course our only channel world to build better proposition.

Those by the way want to number one and two in our market, so of course you prefer to be number one but number and two is always our aim, so.

Thank you.

Thank you. Hey it’s Rob Joys [ph] from Goldman Sachs.

Just a couple of areas from me quickly, on the relative pricing, can you just give us an idea of both our U.S. and Netherlands, who you measuring pricing versus where the kind of relative gap is now and where that’s come from over the last 12 months?

And the second one is just quickly on bol.com, have you seen any impact of launching and is there any indication that they will be looking to move outside of books in Amazon in the Netherlands?

No and the last question we don’t see that, our books sales is even going up, so they launched a website for books and book sales online is even going up. So we haven’t seen any impact of Amazon now launching their book website in the Netherlands.

On the bol.com as I said we are selling more books online than before. We take continues market share in the market of the core category which is books but also taking market share in all categories that are outperforming all online players in the Netherlands and the bol.com coming on market growth and share growth.

So I think we are on good track with bol and becoming really with a high growth in a lot of categories in two players because that’s also important when you look at the web store and the web shop of course, you want to become also in core categories number one or two because that’s similar to retailer or retailer in general and that makes you balance your investment that also you position that your profitability to long run. On the price perception and price performance, we continue to invest as we said in bol side of the ocean by our simplicity programs, we are getting really traction on that what we do.

It’s slowly improving the perception but if you look at actual prices take example of the Landover market, we are really in all case better prices in our major supermarket competitor. So we compare ourselves supermarket competitors, we have a better price precision in any year to go.

The perception of your customers who are have been say over a long period of time having the perception of pricing is higher and it has to do with the mix of promotion versus shale price but the investment we do more in share create much more awareness of our customers and our prices are really good. And a lot of cases really as a gap there is really a gap between us and Savory for Landover, we are much better price to Savory to take the name in this case.

And the same in the Netherlands although of course we know Jumbo is a competitor, we continue to try to come closer to that price level so that we issued our customers when at least like our promotions, so that your attraction of promotion and the good price on the self is composite I think maybe a different between the basket price. And specifically Rob, I don’t have the jar it in front of me but I throw your attention to the jar that James put up in February and maybe you go online, have a look at that because shows specifically the amount of price capital we close, this is our key competitive in the U.S.

over the last couple of year.

And that’s up maintain or improved upon since the last six months, what you say?

Improved, slightly improved, yeah we continue to invest. I mean our AIV is running, our average placing is running lower than the market across all of our markets.

Okay, so year-over-year which is roughly U.S. what you think your prices have improved by?

Well we said last year and it’s going to be similar this year, we gave, we said around $250 million investment in price funded through simplicity, funded through those programs and I see that being a similar level of investments this year.

Okay, alright, thank you very much.

Okay, I believe that was the last question, so ladies and gentlemen that concludes conference call. Thanks for joining us or listening for the webcast and have a nice day.