Note 34
USD I GBP I JPY CHF I EUR I CZK
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In 2005 a loss of EUR 44 (2004: gain of EUR 64) is included in the statement of operations under gain (loss) on foreign
exchange in relation to fair value changes of derivatives that do not qualify for hedge accounting treatment or in relation to
ineffective portions of qualifying hedging instruments. The amounts recognized in cash flow hedging reserve in equity and
amounts released from cash flow hedging reserve to the statements of operations are disclosed in Note 23. No amounts
removed from cash flow hedging reserve have been included in the carrying amount of non-financial assets or liabilities in
the balance sheets. Gains and losses recognized in cash flow hedging reserve in equity as of January 1, 2006 will be released
to the statement of operations at various dates between several days to 25 years from the balance sheet date. The estimated
net amount of the existing losses as of January 1, 2006 that is expected to be recognized in the statement of operations in
2006 is EUR 40.
Sensitivity of fair values to changes in exchange rates and interest rates
Interest rate swaps
from 1 year to 5 years
from 5 years to 10 years
greater than 10 years
250
750
25
Cross-currency interest rate swaps
up to 1 year
from 5 years to 10 years
greater than 10 years
250
33,000
227
408
Foreign currency forwards and swaps
from 5 years to 10 years
greater than 10 years
997
9
110
118
667
2,550
Foreign currency options
from 1 year to 5 years
23
Total derivative financial instruments
997
500
33,000
9
1,661
3,217
Some of Ahold's derivative contracts contain additional termination events, the occurrence of which allows the relevant
derivative to be terminated early. The arising of such a right of early termination could under certain circumstances result in
cross acceleration and cross default under the terms of other derivatives instruments and might under certain circumstances
affect certain debt agreements.
The fair values of derivative contracts maturing within one year are included in current (financial) assets and liabilities. The
fair values of derivative contracts maturing after one year are included in non-current (financial) assets and liabilities. The fair
value of derivative financial instruments is calculated by discounting the future estimated cash flows to net present values
using appropriate market rates prevailing at the end of each financial year. The estimations presented are not necessarily
indicative of the amounts that Ahold could realize in a current market exchange or the value that will ultimately be realized
by the Company upon maturity or disposal.
The following analysis sets out the sensitivity of the fair values of the financial instruments due to a hypothetical change in
exchange rates. The sensitivity analysis assumes an immediate adverse 10% change, which indicates a strengthening of the
currency in which the financial instruments are denominated against the euro as of January 1, 2006, with all other variables
held constant. This analysis is for illustrative purposes only, as in practice market rates rarely change in isolation of other
factors that also affect Ahold's financial position and results.
AHOLD ANNUAL REPORT 2005 165
