Annual General Meeting of Shareholders April 19, 2016 Jan Hommen - - PowerPoint PPT Presentation

Annual General Meeting of Shareholders

April 19, 2016

Jan Hommen

Chairman Supervisory Board

• Opening

Agenda item 1 / Agendapunt 1

• Agenda item 2: Report of the management board for the financial year 2015
• Agenda item 3: Explanation of policy on additions to reserves and dividends
• Agenda item 4: Explanation of the implementation of the Management Board remuneration policy
• Agenda item 5: Proposal to adopt the 2015 financial statements
• Agenda item 6: Proposal to determine the dividend over financial year 2015
• Agendapunt 2: Verslag van de Raad van Bestuur over het boekjaar 2015
• Agendapunt 3: Toelichting op het reserverings- en dividendbeleid
• Agendapunt 4: Toelichting op de uitvoering van het bezoldigingsbeleid van de Raad van Bestuur
• Agendapunt 5: Voorstel tot vaststelling van de jaarrekening over het boekjaar 2015
• Agendapunt 6: Voorstel tot vaststelling dividend over het boekjaar 2015

Agenda items 2 – 6 / Agendapunten 2 – 6

Dick Boer

President and Chief Executive Officer

Looking back at our journey forward

Pioneering with supermarket format

Pioneering with supermarket format

On track to reach our 2017 online ambition

Ahold as a listed company

Responsible Retailing

Expanding healthy options

Strong organic own brands

936,000 children educated in healthy living programs

Long-standing relationships with suppliers

Jeroen – Albert Heijn’s cucumber supplier for 41 years

236,000 proud associates

Strong results in 2015

U.S.: good progress with price, quality investments

Netherlands: sales momentum remained strong

Czech: succesful roll-out new operating model

2015 consumer online sales: €1.8 billion

Strong free cash flow allows us to invest

We continue to build on our strong, local brands

Bringing together two complementary businesses

Common values and strong, trusted local brands

Net Sales*

€38.2bn

Stores worldwide

3,253

Employees worldwide*

236,000

Net Sales*

€24.4bn

Stores worldwide

3,512

Employees worldwide*

154,000

*Note: Sales, Stores and Employees 2015 excludes JVs i.e. JMR for Ahold in Portugal and Super Indo for Delhaize in Indonesia

Wrap-up

Jeff Carr

Chief Financial Officer

Total sales performance

(in millions of euro’s)

Full year

2015 2014 change

actual rates

change

constant rates

Sales 38,203 32,774 16.6% 4.3% Sales growth adjusted for 53rd week 14.2% 2.3% Sales growth excl gas adjusted for 53rd week 15.6% 3.8%

Operating performance

(in millions of euro’s)

• Sales growth driven by

investments in our customer proposition funded by our Simplicity program

• Gross margin improvement

supported by lower gas prices

• Underlying margin slightly affected

by higher pension costs and additional online investments,

• ffset by favorable commodity

prices and gas sales effects

Full year

2015 2014 change

actual rates

change

constant rates

Sales 38,203 32,774 16.6% 4.3% Gross profit margin 27.1% 26.5% 0.6 0.3 Underlying operating income 1,461 1,267 15.3% 3.6% Underlying operating margin 3.8% 3.9% (0.1) (0.1)

Underlying operating income by segment

(in millions of euro’s)

• Balanced investments in customer

proposition and Simplicity savings in the U.S.

• Lower margins in the Netherlands

from additional pension costs and

• nline investments
• Margin in Czech Republic

stabilizing towards pre-acquisition levels Ahold USA The Netherlands Czech Republic 2015 change

constant rates

2015 change 2015 change

constant rates

Sales

23,732

1.4% 12,699 8.6% 1,772 15.3% Underlying

• perating income

940 6.4% 578 0.7% 27 42.3% Underlying

• perating margin

4.0% 0.2 4.6% (0.3) 1.5% 0.3

* Subject to shareholder approval ** Based on adjusted income from continuing operations

Full year

2015 2014 change

actual rates

Underlying operating income 1,461 1,267 15.3%

Restructuring and related charges, other (143) (17)

Operating income 1,318 1,250 5.4%

Net financial expenses (265) (235) (12.8%) Income taxes (224) (248) 9.7% Share in income (loss) of joint ventures 20 24 (16.7%)

Income from continuing operations 849 791 7.3% Basic EPS from continuing operations €1.04 €0.90 15.6% Dividend per share €0.52* €0.48 8.3% Dividend payout %** 49% 51%

Income from continuing operations

(in millions of euro’s)

Dividend

Dividend 2015

• €0.52 per common share

Timetable

• April 21, 2016*

Ex-dividend date for common shares

• April 22, 2016

Dividend record date

• May 4, 2016

Payment date

• April 20, 2016 for ADR’s (American Depositary Receipts)

Free cash flow and uses of cash

(in millions of euro’s)

33

1,051 1,109 1,055 1,184 2012 2013 2014 2015

Strong free cash flow Balanced approach to capital allocation

Operating cash flow* 2,139 Cash capex (804) Disposals 51 Other (202) Free cash flow 1,184 Acquisitions / divestments (150) Dividend (396) Share buyback (161) Other cash changes (404) Change in cash and cash equivalents** 73

* Operating cash flow from continuing operations ** Before impact of exchange rates

Uses of cash

(in millions of euro’s)

929 830 732 804 701 9 190 150 2012 2013 2014 2015 Capital expenditures (cash) Acquisitions (cash)

Disciplined capital expenditure Attractive shareholder returns over €5 billion in the last 4 years

277 768 1,232 161 415 457 414 396 430 1,008 1,000

0.40 0.52

0.1 0.2 0.3 0.4 0.5 0.6 500 1,000 1,500 2,000 2,500

2012 2013 2014 2015 2016* Share buyback Dividend Capital repayment Dividend per share

* Expected

3.2 3.0 3.2 3.5 1.9 4.0 1.9 2.4 1.4

• 0.9

1.3 1.1 Gross debt Cash Net debt

Capital structure

(in billions of euro’s)

Increase in cash, reduction of net debt Lease adjusted leverage decreased

• Cash balances* up €0.5 billion to €2.4 billion
• €161 million share buyback completed in
• 2015. Program stopped after merger

announcement

• Deleverage of net lease-adjusted debt /

EBITDAR at 1.7 times

* Includes cash and short-term deposits

2012 2013 2014 2015

Outlook 2016

• Underlying operating margins in 2016 expected to trend in line with full year 2015, excluding the potential

impact from the intended merger with Delhaize

• Ongoing Simplicity cost saving and efficiency program, expected to deliver €350 million in 2016. This

target is incremental to synergy targets related to the intended merger

• Online businesses well on track to meet 2017 target of €2.5 billion net consumer sales
• Additional logistical investments planned in the Netherlands, resulting in increased cash capex for 2016
• f around €1 billion

Rob van den Bergh

Chairman Remuneration Committee Supervisory Board

Explanation of the implementation of the remuneration policy of the Management Board

Performance year Annual cash incentive plan 2015 2014 2013 2012 2011 Payout as % of target 135% 45% 89% 55% 101% Performance measures Net sales growth (30%) Operating margin (30%) Operating cash flow (30%) Responsible Retailing (10%) Performance year Year of vesting Long-term equity-based program 2016 2015 2014 2013 2012 Shares granted in 2011 (5 year plan) Payout based on TSR performance 110% 90% 130% 110% 110% Shares granted in 2013 (3 year plan) Payout based on TSR performance 100% 90% 130% 110% 110% Payout based on RoC performance 60% Conditional Shares 100% Year of vesting

Jan Hommen

Chairman Supervisory Board

These presentations contain forward-looking statements, which do not refer to historical facts but refer to expectations based on management’s current views and assumptions and

involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those included in such statements. These statements or disclosures may discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to Ahold, based on current beliefs of management as well as assumptions made by, and information currently available to, management. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “plan,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “may,” “possible,” “potential,” “predict,” “project” or other similar words, phrases or expressions. These presentations contain Ahold forward-looking statements as to, amongst others, Ahold tackling major challenges in society as to, amongst others, health, food security, diversity and responsible consumption, its Responsible Retailing Strategy, which covers, amongst others, organic products, sourcing, being a better neighbor, sourcing and people, capital repayment, strong local brands, the intended merger between Ahold and Delhaize, dividend, Ahold’s simplicity program and operating efficiency and cost reductions, reinvestments in Ahold’s business to reduce prices, to improve quality and to drive sales growth, reverse stock split, returns to Ahold’s shareholders and Ahold’s remuneration policy. Many of the risks and uncertainties relate to factors that are beyond Ahold’s control. Therefore, investors and shareholders should not place undue reliance on such statements, which include but are not limited to Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: the

• ccurrence of any change, event or development that could give rise to the termination of the merger agreement; the risk that the necessary regulatory approvals may not be
• btained or may be obtained subject to conditions that are not anticipated; failure to satisfy other closing conditions with respect to the transaction on the proposed terms and

timeframe; the possibility that the transaction does not close when expected or at all; the risks that the new businesses will not be integrated successfully or promptly or that the combined company will not realize the expected benefits from the transaction; Ahold’s ability to successfully implement and complete its plans and strategies and to meet its targets; risks related to disruption of management time from ongoing business operations due to the proposed transaction; the benefits from Ahold’s plans and strategies being less than anticipated; the effect of the announcement or completion of the proposed transaction on the ability of Ahold to retain customers and retain and hire key personnel, maintain relationships with suppliers, and on their operating results and businesses generally; litigation relating to the transaction; the effect of general economic or political conditions; Ahold’s ability to retain and attract employees who are integral to the success of the business; business and IT continuity, collective bargaining, distinctiveness, competitive advantage and economic conditions; information security, legislative and regulatory environment and litigation risks; and product safety, pension plan funding, strategic projects, responsible retailing, insurance and unforeseen tax liabilities. The foregoing list of factors is not exhaustive. Forward-looking statements speak only as of the date they are made. Ahold does not assume any obligation to update any public information or forward-looking statement in these presentations to reflect events or circumstances after the date of these presentations, except as may be required by applicable laws. Outside the Netherlands, Koninklijke Ahold N.V., being its registered name, presents itself under the name of "Royal Ahold" or simply "Ahold."

Cautionary notice

• Agenda item 2: Report of the management board for the financial year 2015
• Agenda item 3: Explanation of policy on additions to reserves and dividends
• Agenda item 4: Explanation of the implementation of the Management Board remuneration policy
• Agenda item 5: Proposal to adopt the 2015 financial statements
• Agenda item 6: Proposal to determine the dividend over financial year 2015
• Agendapunt 2: Verslag van de Raad van Bestuur over het boekjaar 2015
• Agendapunt 3: Toelichting op het reserverings- en dividendbeleid
• Agendapunt 4: Toelichting op de uitvoering van het bezoldigingsbeleid van de Raad van Bestuur
• Agendapunt 5: Voorstel tot vaststelling van de jaarrekening over het boekjaar 2015
• Agendapunt 6: Voorstel tot vaststelling dividend over het boekjaar 2015

Agenda items 2 – 6 / Agendapunten 2 – 6

Questions and Answers

• Register your vote by pressing 1, 2 or 3
• Om te stemmen, druk 1, 2 of 3
• Correction / Correctie
• Make your choice again. Your last choice will be registered.
• Maak opnieuw uw keuze. Uw laatste keuze geldt.

Voting procedure / Stemprocedure

1 = for / voor 2 = against / tegen 3 = abstention / onthouding

• Proposal to adopt the 2015 financial statements
• Voorstel tot vaststelling van de jaarrekening over het boekjaar 2015

Agenda item 5 / Agendapunt 5

• Proposal to determine the dividend over financial year 2015
• Voorstel tot vaststelling dividend over het boekjaar 2015

Agenda item 6 / Agendapunt 6

• Proposal for discharge of liabilities of the members of the Management Board
• Voorstel tot het verlenen van décharge aan de leden van de Raad van Bestuur

Agenda item 7 / Agendapunt 7

• Proposal for discharge of liabilities of the members of the Supervisory Board
• Voorstel tot het verlenen van décharge aan de leden van de Raad van Commissarissen

Agenda item 8 / Agendapunt 8

• Proposal to amend the Remuneration Policy of the Management Board
• Voorstel tot wijziging van het bezoldigingsbeleid van de Raad van Bestuur

Agenda item 9 / Agendapunt 9

Rob van den Bergh

Chairman Remuneration Committee Supervisory Board

Proposal to amend the Remuneration Policy of the Management Board

Reference market

• A new reference market has been established following the

remuneration policy review scheduled for 2015 and in light of the upcoming merger

• The new global reference market combines perspectives

from both cross-industry and sector specific companies in the three most relevant geographies

• Ahold Delhaize positions in the middle of the group in

terms of size and scope

• The proposed remuneration policy results in limited

increases in overall at target pay packages

• Base salaries increased with 1.75%
• LTI increased with 15%-pts (25%-pts for CFO)

Change Base STI at target LTI at target Total Direct CEO € 1,017 100% € 1,017 235% € 2,390 € 4,424 5.4% CFO € 678 100% € 678 175% € 1,187 € 2,543 9.0% COO USA (McCann) € 678 100% € 678 200% € 1,356 € 2,712 5.7% Deputy CEO € 1,007 100% € 1,007 200% € 2,015 € 4,029 COO USA (Holt) $763 100% $763 200% $1,526 $3,053 COO Europe € 641 100% € 641 150% € 962 € 2,244 Ahold Delhaize Amounts in thousands

Global Reference Total Revenue 61% Market Capitalization 50% Total Assets 44% Employees 83%

US Peers Kroger Costco Target Walgreens B.A. Best Buy Co Staples EU Peers Tesco Carrefour Metro Casino Guichard P. J Sainsbury WM Morrison AEX Blend Unilever Philips Heineken Randstad Akzo Nobel Relx

Positioning Ahold Delhaize: 52% (average)

Peer Group Salaries

30% 30% 30% 10% Sales Growth Operating Margin Operating Cash Flow Individual KPIs 20% 40% 40% Sustainability Return on Capital Total Shareholder Return

Metrics

Proposal to amend the Remuneration Policy of the Management Board

Incentives

• Financial and Individual Key Performance Indicators in the

Short-Term Incentive

• Long-term Incentive fully subject to forward looking

performance criteria

• Increased importance of sustainability
• More weight
• Moved into long-term incentive
• Balanced TSR performance peer group
• 7 US companies and 7 European companies (including

Ahold Delhaize)

• Pay-out range adapted to reflect larger TSR peer group

Short-Term Incentives Long-Term Incentives Performance shares

Metrics

Jan Hommen

Chairman Supervisory Board

• Proposal to amend the Remuneration Policy of the Management Board
• Voorstel tot wijziging van het bezoldigingsbeleid van de Raad van Bestuur

Agenda item 9 / Agendapunt 9

• Proposal to appoint PricewaterhouseCoopers Accountants N.V. as external auditor for financial

year 2016

• Voorstel tot benoeming van PricewaterhouseCoopers Accountants N.V. als externe accountant

voor het boekjaar 2016

Agenda item 10 / Agendapunt 10

• Authorization to issue shares
• Aanwijzing tot uitgifte van aandelen

Agenda item 11 / Agendapunt 11

• Authorization to restrict or exclude pre-emptive rights
• Aanwijzing tot het beperken of uitsluiten van voorkeursrechten

Agenda item 12 / Agendapunt 12

• Authorization to acquire shares
• Machtiging tot inkoop van eigen aandelen

Agenda item 13 / Agendapunt 13

• Cancellation of common shares
• Intrekking van gewone aandelen

Agenda item 14 / Agendapunt 14

• Closing
• Sluiting

Agenda item 15 / Agendapunt 15

Questions and Answers

Thank you