O www.ahold.com/reports2009
Notes to the consolidated financial statements
30 Financial risk management and financial instruments - continued
2,863
-
-
(1,043)
Financials
Capital risk management
The Company's primary objective in terms of managing capital is the optimization of its debt and equity balances in order to sustain the
future development of the business, maintain an investment grade credit rating and maximize shareholder value.
The capital structure of the Company consists of net debt, which includes borrowings, cash, cash equivalents and short-term deposits
(see Notes 18, 19, 21, 22 and 26), and equity (see Note 20). Ahold may balance its overall capital structure in a number of ways,
including through the payment of dividends, capital reduction, new share issues and share buybacks as well as the issuance of new debt
or the redemption of existing debt.
Financial instruments
Fair values of financial instruments
The following table presents the fair values of financial instruments, based on Ahold's categories of financial instruments, including current
portions, compared to the carrying amounts at which these instruments are included on the balance sheet:
January 3, 2010
December 28, 20081
Carrying
Fair
Carrying
Fair
million
amount
value
amount
value
Cash and cash equivalents
2,688
2,688
2,863
Short-term deposits held to maturity
295
295
Derivatives
336
336
267
267
Available for sale
3
3
3
3
Loans receivable
93
98
96
102
Receivables
698
698
735
735
Reinsurance assets
56
56
33
33
Total loans and receivables
847
852
864
870
Total financial assets
4,169
4,174
3,997
4,003
Derivatives
(125)
(125)
(130)
(130)
Notes
(1,714)
(1,869)
(2,204)
(2,232)
Other loans
(1)
(1)
(1)
(1)
Financing obligations
(397)
(507)
(413)
(563)
Mortgages payable
(10)
(12)
(14)
(17)
Finance lease liabilities
(1,362)
(1,075)
(1,471)
Cumulative preferred financing shares
(497)
(525)
(497)
(498)
Dividend cumulative preferred financing shares
(32)
(32)
(31)
(31)
Accounts payable
(2,137)
(2,137)
(2,284)
(2,284)
Short-term borrowings
(38)
(38)
(37)
(37)
Interest payable
(58)
(58)
(64)
(64)
Reinsurance liabilities
(59)
(59)
(33)
(33)
Other
(2)
(2)
(3)
(3)
Total financial liabilities at amortized cost
(5,988)
(6,602)
(6,656)
(7,234)
Total financial liabilities
(6,113)
(6,727)
(6,786)
(7,364)
1 Comparative amounts have been adjusted from amounts previously reported to reflect the effect of the changes in accounting policies and retrospective amendments (see Note 3).
Of Ahold's categories of financial instruments, only derivatives and assets available for sale are measured at fair value using the Level 2
inputs as defined in IFRS 7. These inputs are inputs other than quoted prices that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices). The fair value of derivative instruments is estimated by discounting future cash flows
with prevailing market rates or based on the rates and quotations obtained from third parties.
The carrying amount of receivables, cash and cash equivalents, accounts payable, short-term deposits held to maturity, and other current
financial assets and liabilities approximate their fair values because of the short-term nature of these instruments and, for receivables,
because of the fact that any recoverability loss is reflected in an impairment loss. The fair values of quoted borrowings are based on year-
end ask-market quoted prices. The fair value of other non-derivative financial assets and liabilities that are not traded in an active market
are estimated using discounted cash flow analyses based on market rates prevailing at year end. The fair value calculation method and
the conditions for redemption and conversion of the cumulative preferred financing shares are disclosed in Note 22. The accrued interest
is included in other current financial liabilities (see Note 26) and not in the carrying amounts of non-derivative financial assets and liabilities.
Ahold Annual Report 2009 99
