24
Liquidity and cash flows
Ahold
Annual Report 2011
Groupata glance
Performance
Governance
Financials
Investors
Group performance continued
Gross and net debt billion)
(at year end)
Gross debt
Cash and short-term deposits
Net debt
In 2011, gross debt increased by €119 million to €3.7 billion, primarily as a result of the
strengthening of the U.S. dollar against the euro. Ahold's net debt of €1,088 million as of January
12012, was up €351 million compared to last year. Net debt does not include our commitments
under operating lease contracts, which, on an undiscounted basis, amount to €5.9 billion.
These off-balance sheet commitments impact our capital structure. The present value of
these commitments has been added to net debt to measure our leverage against EBITDAR
(i.e. underlying operating income before depreciation, amortization and rent expense). The ratio
of net lease-adjusted debt to EBITDAR stood at 1.8 times at year-end 2011. In general, we are
comfortable operating at around 2 times, which is consistent with our commitment to maintaining
an investment grade credit rating.
Liquidity
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, credit facilities, and available cash balances.
Based on our current operating performance and liquidity position, we believe that cash provided
by operating activities and available cash balances (including short-term deposits) 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 €0.4 billion in loans will mature in 2012, €0.1 billion in 2013 through 2016, and €1.4 billion
after 2016.
Our strategy over the past several years has positively impacted the credit ratings assigned to
Ahold by Standard Poor's (S&P) and Moody's. S&P upgraded Ahold's corporate credit rating to
BBB with a stable outlook in June 2009, and since then this rating has remained unchanged. In
March 2011, Moody's affirmed Ahold's Baa3 issuer credit rating and changed its outlook from
positive to stable. Maintaining investment grade credit ratings is a cornerstone of our strategy as
they serve to lower the cost of funds and to facilitate access to a variety of lenders and markets.
Group credit facility
In June 2011Ahold completed the refinancing of its five-year €1.2 billion committed credit facility
originally maturing in August 2012. The new €1.2 billion committed, unsecured, multi-currency,
and syndicated credit facility has a base term of five years and includes the possibility of
12-month extensions in each of the first two years. It may be used for working capital and for
general corporate purposes and provides for the issuance of $550 million (€425 million) in letters
of credit. As of January 1, 2012, there were no outstanding borrowings under the credit facility
other than letters of credit to an aggregate amount of $287 million (€222 million).
As of year-end 2011liquidity amounted to €3.6 billion, defined as cash (including cash
equivalents and short-term deposits) of €2.6 billion and the undrawn portion of the committed
credit facility of €1.0 billion. Under normal conditions we expect to operate with liquidity around
€2.0 billion, evenly split between cash and the undrawn portion of our committed credit facilities.
It is our intention to move to this level of liquidity as we continue to invest in growth, reduce our
debt, and return cash to shareholders, resulting in a more efficient capital structure.
