30 Financial risk management and financial instruments continued
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Ahold
Annual Report 2011
Groupata glance
Performance
Governance
Notes to the consolidated financial statements continued
Investors
Year ended January 2, 2011
Contractual cash flows
million
Net carrying
amount
Within
1 year
Between
1 and 5
years
After
5 years
Total
Non-derivative financial liabilities
Notes
(1,459)
(88)
(690)
(1,654)
(2,432)
Other loans
(2)
(1)
(1)
(2)
Financing obligations
(400)
(40)
(165)
(372)
(577)
Mortgages payable
(9)
(3)
(7)
(10)
Finance lease liabilities
(1,155)
(154)
(604)
(1,193)
(1,951)
Cumulative preferred financing shares1
(497)
(30)
(90)
(88)
(208)
Short-term borrowings
(39)
(39)
(39)
Reinsurance liabilities
(83)
(20)
(56)
(8)
(84)
Accounts payable
(2,323)
(2,323)
(2,323)
Other
(2)
(2)
(2)
Derivative financial assets and liabilities
Cross-currency derivatives and interest flows
236
(32)
39
141
148
Interest derivatives and interest flows
39
10
21
11
42
1 Cumulative preferred financing shares have no maturity. For the purpose of the table above, the future dividend cash flows were calculated until the coupon reset date of each of
the four share-series (2013, 2016, 2018, and 2020). No liability redemption was assumed.
All derivative financial instruments and non-derivative financial liabilities held at the reporting date, for which payments are already
contractually agreed, have been included. Amounts in foreign currency have been translated using the reporting date closing rate.
Cash flows arising from financial instruments carrying variable interest payments have been calculated using the forward curve interest
rates as of January 1, 2012, and January 2, 2011, respectively. Refer to Note 34 for the liquidity risk related to guarantees.
Credit ratings
As of January 1, 2012, Moody's Long Term Issuer Rating on Ahold was Baa3, unchanged in 2011, while the outlook was revised
from positive to stable. Standard Poor's Corporate Credit Rating assigned to Ahold was BBB with a stable outlook, both unchanged
during 2011.
Maintaining investment grade credit ratings is a cornerstone of the Company's strategy as they serve to lower the cost of funds and to
facilitate access to a variety of lenders and markets.
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,
equity, and the present value of the operating lease commitments. 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.
