9 Net financial expense
10 Income taxes
Ahold
Annual Report 2011
Group at a glance^^^^^^^^B Performance (Sovernance
Notes to the consolidated financial statements continued
Investors
million 2011 2010
Interest income
20
18
Interest expense
(245)
(288)
Gains (losses) on foreign exchange
(7)
3
Fair value gains on financial instruments
20
10
Other financial expense
(104)
(2)
Net financial expense
(316)
(259)
Interest income is mainly attributable to the interest on cash and cash equivalents and short-term cash deposits. Interest expense primarily
relates to financial liabilities measured at amortized cost (mainly loans, finance lease liabilities, and cumulative preferred financing shares)
and interest accretions to provisions.
The gains (losses) on foreign exchange in both 2011 and 2010 mainly result from the foreign exchange translation of the GBP 500 million
notes. Foreign exchange results on financial assets and liabilities, including amounts released from the cash flow hedging reserve, are
presented as part of net financial expense, within gains (losses) on foreign exchange. Foreign exchange results arising from the purchase
of goods for sale or goods and services consumed in Ahold's operations are included in cost of sales or in the appropriate element of
operating expenses, respectively. In 2011the Company incurred a net exchange result (including impact of foreign exchange hedging
instruments) of €1 million in operating income (2010: losses of €1 million).
The fair value gains on financial instruments primarily resulted from the derivatives related to the GBP 500 million notes (an interest rate
and a cross currency swap), which do not qualify for hedge accounting treatment, and were mainly caused by the US dollar interest rate
and exchange rate movements. For more information on financial instruments, see Note 30.
Other financial expense in 2011 included a loss of €92 million, as a result of a financial guarantee provision, related to the estimated
impact of the legal judgment rendered in connection with Stop Shop Bradlees Lease Litigation with Vornado. For more information,
see Note 34.
Income taxes on continuing operations
The following table specifies the current and deferred tax components of income taxes on continuing operations in the income statement:
million 2011 2010
Current income taxes
Domestic taxes (the Netherlands)
(111)
(169)
Foreign taxes
United States
42
(48)
Europe - Other
(11)
(4)
Total current tax expense
(80)
(221)
Deferred income taxes
Domestic taxes (the Netherlands)
(33)
(10)
Foreign taxes
United States
(37)
(33)
Europe - Other
10
(7)
Total deferred tax expense
(60)
(50)
Total income taxes on continuing operations
(140)
(271)
