30 Financial risk management and financial instruments (continued)
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Ahold Annual Report 2012 124
Ahold at a glance
Our strategy
Our performance
Governance
Finandals
Investors
Notes to the consolidated
financial statements
Year ended January 1, 2012
Contractual cash flows
million
Net carrying
amount
Within
1 year
Between
1 and 5
yeais
After
5 yeare
Total
Non-derivative financial liabilities
Notes
(1,509)
(496)
(270)
(1,652)
(2,418)
Other loans
(3)
(2)
(1)
(3)
Financing obligations
(399)
(67)
(271)
(266)
(604)
Mortgages payable
(7)
(3)
(5)
(8)
Finance lease liabilities
(1,225)
(214)
(857)
(805)
(1,876)
Cumulative preferred financing shares1
(497)
(24)
(86)
(68)
(178)
Short-term borrowings
(41)
(41)
(41)
Reinsurance liabilities
(108)
(42)
(58)
(9)
(109)
Accounts payable
(2,436)
(2,436)
(2,436)
Other
(2)
(2)
(2)
Derivative financial assets and liabilities
Cross-currency derivatives and interest flows
234
117
(119)
193
191
Interest derivatives and interest flows
57
9
36
13
58
1 Cumulative preferred financing shares have no maturity. For the purpose of the fable above, the future dividend cash flows were calculated until the coupon reset dale 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 December 30, 2012, and January 1, 2012, respectively. Refer to Note 34 for the liquidity risk related to guarantees.
Credit ratings
As of December 30, 2012, Moody's Long Term Issuer Rating on Ahold was Baa3, with a stable outlook, both unchanged during 2012. Standard Poor's Corporate Credit Rating assigned
to Ahold was BBB with a stable outlook, both unchanged during 2012.
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 lease adjusted 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.
