Notes to the consolidated financial statements
29 Financial risk management and financial instruments continued
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31 www.ahold.com/reports2008
Financial statements
AHOLD ANNUAL REPORT 2008 88
Credit risk
Ahold has no significant concentrations of credit risk. Sales to retail customers are made in cash, checks, and debit cards or via
major credit cards. Sales to franchisees are done on credit. Derivative counterparties and cash transactions are limited to high-credit-
quality financial institutions' products. Ahold invests in money market funds with a rating of AAA (Standard Poor's). With respect
to credit risk, derivative contracts with counterparties are entered primarily into under standard terms and conditions of the
International Swap and Derivatives Association. The counterparties have an externally validated investment grade credit rating.
Ahold has policies that limit the amount of counterparty credit exposure to any single financial institution or investment vehicle
and these exposures are continually monitored. The maximum exposure to credit risk is represented by the carrying amounts of the
financial assets in the consolidated balance sheet (refer to the fair values classes of financial instruments table). The maximum
amount of a credit risk loss that Ahold would incur if financial institutions that are parties to the derivative instruments completely
failed to perform according to the terms of the contracts is EUR 158 million as of December 28, 2008 (December 30, 2007:
EUR 205 million).
The majority of Ahold's past due but not impaired financial assets as of December 28, 2008 consists of receivables and is past due
less than three months. The concentration of credit risk with respect to receivables is limited due to the Company's customer and
vendor base being large and unrelated. As a result, management believes there is no further credit risk provision required in excess
of the normal individual and collective impairment (based on an aging analysis) performed as of December 28, 2008. For further
discussion on Ahold's receivables, see Notes 15 and 17.
Liquidity risk
Ahold manages its liquidity risk on a consolidated basis with cash provided from operating activities being a primary source of
liquidity in addition to debt and equity issuances in the capital markets, committed and uncommitted credit facilities, letters of
credit under credit facilities, and available cash including net cash from divestments. Ahold manages short-term liquidity based on
projected cash flows over rolling periods of six months. As of December 28, 2008, Ahold had EUR 0.9 billion of committed undrawn
bank facilities, which can be drawn on for working capital and general corporate purposes and EUR 2.9 billion of cash balances
available to manage its liquidity.
Based on the current operating performance and liquidity position, the Company 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.
The following tables summarize the maturity profile of the Company's derivative and non-derivative financial liabilities as of
December 28, 2008 and December 30, 2007, respectively, based on contractual undiscounted payments:
Contractual cash flows
million
Net
carrying amount
Within 1 year
Between
1 and 5 years
After 5 years
Total
Year ended December 28, 2008
Non-derivative financial liabilities
Notes
(2,204)
(490)
(1,251)
(1,617)
(3,358)
Other loans
(1)
(1)
(1)
Financing obligations
(413)
(42)
(166)
(434)
(642)
Mortgages payable
(14)
(5)
(9)
(4)
(18)
Finance lease liabilities
(1,075)
(143)
(537)
(1,236)
(1,916)
Cumulative preferred financing shares1
(497)
(31)
(82)
(35)
(148)
Short-term borrowings
(37)
(37)
(37)
Other
(36)
(10)
(19)
(8)
(37)
Derivative financial assets and liabilities
Cross-currency derivatives and interest flows
111
(31)
56
(25)
Interest derivatives and interest flows
27
14
16
30
1 Cumulative preferred financing shares have no maturity. For the purposes of the tables above and determining future dividend cash flows, it is assumed that the dividend
is calculated until the coupon reset date of each of the four-share series being 2010, 2013, 2016 and 2018, but with no liability redemption.
