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Annual Report 2016 01 betterAnnual Reporttogether 2016 Overview Business review Governance Financials Investors Ahold Delhaize Annual Report 2016 01 Introduction Welcome to our first Annual Report as a merged company, Ahold Delhaize. In 2016, we brought two successful businesses together to In 2016, we brought two create one of the world’s largest retail groups, able to deliver even more for the customers of our great local brands. This is reflected in the theme of our report: Better together. It is also successful businesses together the name of our strategy, which you will find out more about as you read our report. We believe that our long-term financial to create one of the world’s success is directly tied to how well we manage our financial, natural, and human resources. For that reason, we have decided to publish one report that provides an integrated view largest retail groups, able of our sustainability performance as part of our overall company performance. Please read on to find out more about our to deliver even more for year and the good momentum we achieved following the merger. Our report outlines the progress our great local brands made on all the customers of our great our strategic priorities, including making our fresh offering even fresher, providing healthier choices for our customers, reducing waste, supporting our communities, expanding our local brands. online offering, making it easier to shop, and much more. Overview Business review Governance Financials Investors Ahold Delhaize Annual Report 2016 02 In this year’s report Overview Business review Governance Financials Investors 01 Introduction 20 Our Better Together strategy 73 Our Management Board 110 Financial statements 240 Share performance 02 Contents 22 Our purpose and Executive Committee 111 Consolidated income 242 Shareholder structure 04 We are Ahold Delhaize 23 Our sustainable 77 Supervisory Board statement 244 Shareholder returns 05 Group highlights business model 81 Corporate governance 112 Consolidated statement 245 Key dates of comprehensive income 06 Our story 29 Our promises 88 Supervisory Board report 246 Five-year overview 113 Consolidated balance sheet 09 Where we operate 33 Our values 94 How we manage risk 248 Contact information 35 Market overview 103 Remuneration 114 Consolidated statement 10 Our great local brands of changes in equity 250 Cautionary notice 38 Our stakeholders 108 Declarations 14 Message from our CEO 115 Consolidated statement 17 Chairman and CEO interview 40 Material sustainability topics of cash flows 42 Value chain 116 Notes to the consolidated 44 Sustainable retailing financial statements 48 Group key financial indicators 216 Parent company 49 Group financial review financial statements 70 Non-GAAP measures 218 Notes to the parent company financial statements 229 Other information For more information visit our website at www.aholddelhaize.com Overview Business review Governance Financials Investors Ahold Delhaize Annual Report 2016 03 Overview Overview Business review Governance Financials Investors Ahold Delhaize Annual Report 2016 04 We are Ahold Delhaize Together, we build great local brands, bringing fresh inspiration every day. Our family of strong local brands delivers great food, value and innovations to customers in 11 countries through 6,556 stores and online. We combine global scale with the most local and personal service. We make supermarkets smarter and online shopping faster and better. And are committed to becoming an even more sustainable business. We are working hard to be the world’s most inspiring food retailer. We are better together. Overview Business review Governance Financials Investors Ahold Delhaize Annual Report 2016 05 Group highlights On July 23, 2016, the merger between Ahold and Delhaize Underlying operating Underlying Group was completed. Legally, Net sales of Operating income of income of operating margin the merger was implemented by Delhaize Group merging into €49.7bn €1.6bn €1.9bn 3.8% Ahold, with the entity renamed Pro forma net sales of Pro forma operating income of Pro forma underlying operating Pro forma underlying Ahold Delhaize. income of operating margin As a result, Delhaize Group’s financial results have been included in the Consolidated €62.3bn €2.0bn €2.3bn 3.7% Financial Statements since the merger date, affecting comparability of the 2016 financial results to the 2015 results. This Annual Report also provides numbers and analysis on a pro forma basis, using data that is based on the assumption that the merger became effective on Underlying EBITDA Pro forma underlying earnings Free cash flow of the first day of Ahold’s 2015 financial from continuing operations year. This provides a comparative basis, per basic share at Dividend per common share for illustrative purposes, to facilitate assessment of the current performance €3.3bn Pro forma underlying EBITDA after €1.7bn of the combined company. 1 €capital1.4bn expenditure €4.1bn €1.17 €0.57 Own-brand sales42% from healthy products 6,556stores worldwide 370,000associates €net consumer2.3bn online sales 1 Free cash flow and capital expenditure including Delhaize Group for a full year. Overview Business review Governance Financials Investors Ahold Delhaize Annual Report 2016 06 working betterbusiness together Tracing our roots back 150 years, we have come together to build on our portfolio of strong local brands, common purpose and deep commitment to sustainable retailing. Together we are sharing best practices, learning from one another, and realizing the benefits of our scale. Overview Business review Governance Financials Investors Ahold Delhaize Annual Report 2016 07 great localflavors brands Our family of great local brands serves more than 50 million customers each week across 11 countries. Each brand shares a passion for delivering quality, value and experiences to customers and partnering with local communities to be a better neighbor. Overview Business review Governance Financials Investors Ahold Delhaize Annual Report 2016 08 creating freshoffering inspiration We are bringing fresh inspiration and new innovations every day to customers, communities and associates. Our brands aim to make life a little easier, healthier and more affordable for everyone, to build a better future for our businesses and their communities. Overview Business review Governance Financials Investors Ahold Delhaize Annual Report 2016 09 Where we operate 38%net sales Europe Albert Heijn Gall & Gall AB Delhaize bol.com ENA Etos Albert Mega Image Maxi Pingo Doce* Tempo 62%net sales United States Food Lion Stop & Shop Hannaford Giant Martin’s Giant Food Peapod bfresh Asia Super Indo* *Joint venture Overview Business review Governance Financials Investors Ahold Delhaize Annual Report 2016 10 Our great local brands Our great local brands are the Ahold USA heart of our businesses. Each brand shares a passion for delivering great food, value and innovations, both in stores and Market area Market area Market area online, and for creating inclusive Connecticut, Massachusetts, New Jersey, Pennsylvania Pennsylvania, Maryland, Virginia workplaces that provide New York and Rhode Island and West Virginia rewarding career opportunities. Formats Formats Formats Supermarkets, superstores, online shopping Supermarkets, superstores, online shopping Supermarkets, superstores, online shopping Our brands have also established meaningful, lasting commitments to strengthen local communities, 413stores 147stores 44stores source responsibly and help Customer proposition Customer proposition Customer proposition customers make healthier My Stop & Shop helps me save money, My Giant helps me save money, My Martin’s helps me save money, choices every day. save time and eat well save time and eat well save time and eat well For more information about our brands, visit our website at www.aholddelhaize.com Market area Market area Market area Delaware, District of Columbia, Maryland 12 states across the U.S. East Coast Massachusetts and Virginia and Midwest plus the District of Columbia Formats Formats Formats Small supermarkets Supermarkets, superstores, online shopping Online grocery shopping 168stores online store 4stores Total associates Customer proposition Customer proposition Customer proposition Ahold USA segment: My Giant helps me save money, We make life easier. We give our customers bfresh – your super city market – the perfect save time and eat well the time back to do the things they love mash-up of fresh foods, groceries, inspiring meals, killer service and great value 114,000 Overview Business review Governance Financials Investors Ahold Delhaize Annual Report 2016 11 Our great local brands continued Delhaize America The Netherlands Market area Market area Market area Market area Delaware, Georgia, Kentucky, Maryland, The Netherlands, Belgium and Germany The Netherlands The Netherlands North Carolina, Pennsylvania, South Carolina, Formats Store formats Store formats Tennessee, Virginia and West Virginia Supermarkets, convenience stores, Drugstores, online shopping Wine and liquor stores, online shopping Formats online shopping Supermarkets, convenience stores 1,033stores 1,011stores 547stores 605stores Customer proposition Customer proposition Customer proposition Customer proposition You can count on Food Lion…Every day! Everybody Appie The best drugstore with the best & affordable Everyone an expert solutions for Health, Beauty, Care & Baby Total associates Delhaize America segment: Market area Market area Maine, Massachusetts, New Hampshire, The Netherlands, Belgium
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