Notes 32, 33
These unconsolidated related parties consist of:
ICA, a joint venture of Ahold in the retail and wholesale
business.
JMR, a joint venture of Ahold in the retail business.
Stationsdrogisterijen, a joint venture of Ahold in the
retail business.
Real estate joint ventures, in which Ahold has an interest,
holding properties operated by Ahold or its subsidiaries.
Accounting Plaza B.V., an associate of Ahold that renders
accounting and administrative services to certain Ahold
subsidiaries in the Netherlands.
Kobalt Media Services B.V., an associate of Ahold that
renders promotional and advertising services to certain
Ahold subsidiaries in the Netherlands.
Loyalty Management Nederland B.V., an associate of
Ahold that renders services relating to the management of
customer loyalty programs to certain Ahold subsidiaries in
the Netherlands.
A.M.S. Coffee Trading, an associate of Ahold that
generates sales transactions with Ahold Coffee Company.
Several related parties of Schuitema render services in
support of certain projects of franchisees and associated
food retailers serviced by Schuitema.
U.S. Foodservice had product purchasing arrangements
with five Value Added Service Providers ("VASPs") that
provided varying degrees of support to U.S. Foodservice
primarily in the procurement of private label and signature
brand products. As part of its normal business practice,
U.S. Foodservice guaranteed some of the obligations of
the VASPs to vendors relating to purchases made on
behalf of U.S. Foodservice. In 2004, U.S. Foodservice
stopped doing business with all five VASPs.
Ahold Dutch managers and employees
In January 1994, a group of Ahold's Dutch managers and
employees acquired a EUR 15 capital investment in the
Dutch Customer Fund, an independent investment fund
that primarily invests all of its assets in Ahold's shares and
debt. The capital investment had previously been held by
Het Weerpad B.V., an investment company of the Heijn
family, founders of Ahold.
Ahold made loans to this group of managers and employees
to assist them with their investment in the Dutch Customer
Fund. In July 1996 and April 1998, additional loans were
granted to Ahold's Dutch managers and employees to
purchase additional investments in the Dutch Customer
Fund. For more information on these loans, see Note 19.
Compensation of key management personnel
For information regarding the compensation of key
management personnel, see Note 8.
33 Financial instruments, risks and fair values
of financial assets and liabilities
Financial risk management
Ahold's primary market risk exposures relate to currency
exchange rate, interest rate and commodity price
fluctuations. In order to manage the risk arising from these
exposures, a variety of financial instruments may be utilized.
Currency risk
Ahold operates in a variety of countries throughout the world,
and is exposed to foreign exchange risk arising from various
currency exposures. Foreign exchange risk arises from
future commercial transactions and recognized assets and
liabilities. To protect the value of future foreign currency
cash flows, including lease payments and firm purchase
commitments, and the value of assets and liabilities
denominated in foreign currency, Ahold enters into various
financial instruments, including forward contracts and
currency swaps. It is Ahold's policy to cover foreign
exchange transaction exposure in relation to existing assets,
liabilities and firm commitments. Translation risk related to
Ahold's foreign subsidiaries, joint ventures and associates is
not hedged.
Interest rate risk
Ahold's interest rate risk arises primarily from its debt.
To manage interest rate risk, Ahold has an interest rate
management policy aimed at reducing volatility in its interest
expense and maintaining a target percentage of its debt in
fixed rate instruments. Ahold's financial position is largely
fixed by long-term debt issues and derivative financial
instruments such as floating-to-fixed interest rate swaps and
cross-currency floating-to-fixed interest rate swaps, which
allow Ahold to maintain a target range of floating rate debt.
Occasionally Ahold may enter into fixed-to-floating interest
rate swaps to hedge fair value interest rate risk arising where
fixed rate loans are in excess of the target.
Commodity price risk
Ahold is exposed to the risk of an increase in the prices
of commodities used directly and indirectly within its value
chain. Commodity derivative contracts may be utilized to
hedge against commodity price risk for Ahold's expected
consumption. As of December 31, 2006, no commodity
contracts were outstanding.
Credit risk
Ahold has no significant concentrations of credit risk. It has
policies in place aimed at ensuring that wholesale sales of
products are made to customers with an appropriate credit
history. Sales to retail customers are made in cash, checks,
debit cards or via major credit cards. Derivative
counterparties and cash transactions are limited to high-
credit-quality financial institutions. Ahold has policies that
limit the amount of credit exposure to any financial
institution. The maximum amount of loss due to credit risk
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 161 as of
December 31, 2006 (2005: EUR 141).
Ahold Annual Report 2006 107
