BsimEiHHta
Group financial review (continued)
Liquidity and cash Hows
Liquidity
-
million
Ahold at a glance
Business review
Governance
Ahold manages its liquidity on a consolidated basis
with cash provided from operating activities as the
primary source of liquidity, in addition to potential
debt and equity issuances in the capital markets,
committed and uncommitted credit facilities and
available cash balances. Ahold aims to keep up
to €1 billion in cash to meet business needs and
seasonality fluctuations in cash how during the
year. Ahold believes this cash liquidity buffer should
be sufficient to cover for cash how seasonality
fluctuations with no need to borrow.
Under normal conditions, Ahold expects to operate
with an aggregate liquidity of around €2 billion,
evenly split between cash necessary for operating
business needs and seasonality fluctuations and
the undrawn portion of its €1 billion committed
credit facility.
As of year-end 2015, liquidity amounted to
€3,338 million (2014: €3,073 million), defined as
cash (including cash, cash equivalents and short-term
deposits and similar instruments) of €2,354 million
(2014: €1,886 million) and the undrawn portion
of the committed credit facility of €984 million
(2014: €1,187 million).
As a result of the announcement that Ahold intends
to merge with Delhaize, approximately €1 billion
will be returned to shareholders via a capital return
and reverse stock split, subject to the conditions as
explained in Note 35,
Based on the current operating performance
and liquidity position, Ahold believes that cash
provided by operating activities and available
cash balances will be sufficient for working capital,
capital expenditures, interest payments, dividends
and scheduled debt repayment requirements for
the next 12 months and the foreseeable future.
Group credit facility
Ahold has access to a €1 billion committed,
unsecured, multi-currency and syndicated credit
facility that was amended and restated in February
2015. As part of the most recent amendment, Ahold
reached an agreement to reduce the size of the
credit facility from €1.2 billion to €1 billion (providing
for the issuance of $275 million (approximately
€250 million) in letters of credit). At the same
time, the facility was extended to 2020 with
two potential extensions after 12 and 24 months
that would take the facility to 2021 and 2022
respectively. In February 2016, the first extension
was successfully agreed with the banking group.
The credit facility contains customary covenants
and is subject to a financial covenant that
requires Ahold, in case its corporate rating
is lower than BBB Baa2 from S&P and
Moody's respectively, not to exceed a maximum
leverage ratio, as defined in the facility agreement
(the ratio of consolidated total net borrowings to
consolidated operating income before depreciation
and amortization) of 4.0:1During 2014 and
2015, Ahold was in compliance with the
applicable covenants.
As of January 3, 2016, there were no outstanding
borrowings under the credit facility other than letters
of credit for an aggregate amount of $18 million
(€16 million).
Credit ratings
Maintaining investment grade credit ratings is a
cornerstone of Ahold's strategy because such ratings
serve to lower the cost of funds and facilitate access
to a variety of lenders and markets. Ahold's current
credit ratings from the solicited rating agencies are
as follows:
a Standard Poor's: Corporate credit rating BBB
stable outlook as of June 2009
a Moody's: Issuer credit rating Baa2
stable outlook as of August 2015
Ahold
Annual Report 2015
Cash Hows
Ahold consolidated cash hows for 2015 and 2014 are as follows:
million
2015
2014
Operating cash flows from continuing operations
2,139
1,893
Purchase of non-current assets
(804)
(732)
Divestment of assets disposal groups held for sale
51
77
Dividends from joint ventures
21
18
Interest received
4
6
Interest paid
(227)
(207)
Free cash flow
1,184
1,055
Repayments of loans and finance lease liabilities
(135)
(104)
Dividends paid on common shares
(396)
(414)
Share buyback
(161)
(1,232)
Acquisition divestments of businesses, net of cash acquired divested
(150)
(481)
Cash flows from discontinued operations
(6)
(19)
Capital repayment
(1,008)
Other
(16)
(24)
Change in cash, cash equivalents, and short-term deposits
and similar instruments (before impact of exchange rates)
320
(2,227)
Changes in short-term deposits and similar instruments
(247)
1,222
Net cash from operating, investing and financing activities
73
(1,005)
Free cash how, at €1,184 million, increased by
€129 million compared to 2014. Operating cash
hows from continuing operations were higher by
€246 million. At constant exchange rates, operating
cash hows from continuing operations were higher
by €36 million, or 2%. The purchase of non-current
assets was higher by €72 million, or €1 million
higher at constant exchange rates.
Free cash flow
I 1,051 ,'109 1,055
845^
In 2015, the main uses of free cash how included:
a Common stock dividend at €0.48 per share
resulting in a cash outflow of €396 million
a Acquisition of 25 A&P stores for a purchase price
of $154 million, or €141 million (total purchase
consideration net of cash acquired). For more
information, see Note 4
a €161 million returns to shareholders through
share buyback program. The €500 million
share buyback program (announced in February
2015) was suspended at the end of June 2015
in connection with the intended merger of Ahold
and Delhaize
a Debt repayments totaling €135 million, primarily
related to regular payments on finance
lease liabilities
2011 2012 2013 2014 2015
