9
€l.4 billion
Group performance
Liquidity and cash flows
Liquidity
Group credit facility
31 www.ahold.com/reports2008
Gross and net debt
net debt, down 35% compared
to last year
Operating and financial review
Property, plant and equipment increased by EUR 142 million, as a result of the
strengthening of the U.S. dollar against the euro as well as capital expenditures
exceeding depreciation; the divestment of Schuitema was a partial offset. Capital
expenditures increased mainly at Giant-Landover, because of its store remodeling
program, and at Albert Heijn, because of the conversion of 54 former Schuitema
stores into Albert Heijn stores.
Equity increased by EUR 789 million, mainly as a result of the addition of current
year's net income, partially offset by the dividend payment related to 2007.
In 2008, gross debt decreased from EUR 5.4 billion to EUR 4.2 billion. This was
mainly due to loan repayments of EUR 1.1 billion and the divestment of Schuitema,
partially offset by the strengthening of the U.S. dollar against the euro. Ahold's
net debt to equity ratio was 29 percent as of December 28, 2008 compared to
54 percent as of December 30, 2007.
Ahold's pension and other post-employment benefit plans showed a deficit
of EUR 199 million as of December 28, 2008 compared to a surplus of
EUR 486 million as of December 30, 2007. This deterioration was mainly
due to significant negative investment results on the plan assets. However,
actuarial gains and losses (such as differences between expected and actual
returns on assets, or the impact of changes in the discount rates) are not
recognized if they are within certain limits (as further described in Note 3 to
the consolidated financial statements). Therefore, the defined benefit plan assets
and liabilities on the balance sheet improved compared to last year, mainly as a
result of cash contributions to the plans. For more information on Ahold's defined
benefit plans, see Note 22 to the consolidated financial statements.
Ahold relies on cash provided by operating activities as a primary source of liquidity
in addition to debt and equity issuances in the capital markets, letters of credit
under credit facilities and available cash balances. Our strategy over the past years,
including the divestments resulting from the 2006 strategic review, have positively
impacted the credit ratings assigned to Ahold by Moody's and Standard Poor's
("S&P"). Both agencies restored our corporate rating to investment grade during
2007. S&P revised its outlook to positive on January 14, 2009. For more
information about our credit ratings, please refer to "Credit ratings" in Note 29
to the consolidated financial statements.
Based on our current operating performance and liquidity position, we believe that
cash provided by operating activities and available cash balances will be sufficient
for working capital, capital expenditures, dividend payments, interest payments
and scheduled debt repayment requirements for the next 12 months and the
foreseeable future. A total of EUR 372 million of loans will mature in 2009,
EUR 1.0 billion in 2010 through 2013 and EUR 1.3 billion after 2013.
Ahold's EUR 1.2 billion committed unsecured syndicated multi-currency credit
facility has a base term of five years ending August 2012, with an option to extend it
to August 2014. The credit facility may be used for working capital and for general
corporate purposes and provides for the issue of USD 550 million of letters of credit.
As of December 28, 2008, there were no outstanding borrowings under the credit
facility other than letters of credit to an aggregate amount of USD 413 million.
AHOLD ANNUAL REPORT 2008 I 14
billion
10.0
7.7
5.5
6.5
6.8
4.6
5.4
2.1
4.2
1.8
2.2
3.2
3.3
2.9
Jan 02,
Jan 01,
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CD
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CD
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Dec 28,
2005
2006
2006
2007
2008
Cash
Gross debt
Net debt
