Financial review (continued)
Ahold Annual Report 2012 37 Ahold at a glance
Our strategy
Our performance
Governance
Financials
Investors
Financial position
Ahold's consolidated balance sheets as of December 30, 2012, and
January 1, 2012, are summarized as follows:
million
December
30, 2012
January 1,
2012
Property, plant and equipment
6,038
5,984
Intangible assets
1,569
836
Other non-current assets
3,059
2,967
Cash, cash equivalents and short-term
deposits
1,886
2,592
Inventories
1,492
1,466
Other current assets
1,038
1,135
Total assets
15,082
14,980
Equity
5,995
5,877
Non-current portion of long-term debt
3,107
3,144
Other non-current liabilities
1,553
1,345
Short-term borrowings and current portion
of long-term debt
139
536
Payables
2,667
2,436
Other current liabilities
1,621
1,642
Total equity and liabilities
15,082
14,980
Property, plant and equipment increased by €54 million as capital
expenditures were mostly offset by depreciation, impairments and the
weakening of the U.S. dollar against the euro. The increase in
intangible assets primarily relates to the 2012 acquisitions.
For the total Group, our defined benefit plans, excluding unrecognized
actuarial losses, showed a deficit of €654 million at year end 2012
compared to a surplus of €255 million at year end 2011This
deterioration was due to lower interest rates in both the Netherlands
and the United States, and partially offset by positive investment results
on the plan assets and cash contributions made to the plans.
A significant number of union employees in the United States are
covered by multi-employer plans. With the help of external actuaries,
we have updated the most recent available information that these
plans have provided (generally as of December 31, 2011) for market
trends and conditions through the end of 2012. We estimate our
proportionate share of the total net deficit to be $967 million (€732
million) at year end 2012 (2011: $943 million or €729 million). These
amounts are not recognized on our balance sheet. While this is our
best estimate based on the information available to us, it is imprecise
and not necessarily reliable. For more information see Note 23 to the
consolidated financial statements.
Equity increased by €118 million, mainly as a result of the addition of
the current year's net income, partially offset by the dividend payment
related to 2011 and the €1 billion share buyback program we
completed in March 2012.
The decrease in short-term borrowings and current portion of
long-term debt results from a redemption of the €407 million notes
due in March 2012. These notes have been swapped to $362 million
and the fair value of the underlying hedge (€141 million) was included
in other current assets as of January 1, 2012, and subsequently settled
on maturity.
In 2012, gross debt decreased by €434 million to €3.2 billion,
primarily as a result of the redemption of €407 million notes and the
weakening of the U.S. dollar against the euro. Ahold's net debt of
€1,360 million as of December 30, 2012, was up €272 million
compared to last year. Net debt does not include our commitments
under operating lease contracts, which, on an undiscounted basis,
amount to €5.7 billion.
These off-balance sheet commitments impact our capital structure.
The present value of these commitments is added to net debt to
measure our leverage against EBITDAR (i.e. underlying operating
income before depreciation, amortization and gross rent expense).
The ratio of net lease-adjusted debt to EBITDAR stood at 1.8 times at
year end 2012, unchanged from last year, as the impact of cash spent
was neutralized by the increase of EBITDAR (driven by exchange rates).
Under normal conditions we expect to operate at around 2 times,
which is consistent with our commitment to maintaining an investment
grade credit rating.
Gross and net debt
billion
4.2
1.4
3.7
0.7
3.6
0.7
3.7
1.1
-
2.9
3.0
2.8
2.6
2008 2009 2010 2011
(Gross debt 0Cash and short-term deposits Net debt
Liquidity and cash flows
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 €22 million in loans will mature in
2013, €0.4 billion in 2014 through 2017 and €1.0 billion after 2017.
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 with a stable outlook. 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.
