30 Financial risk management and financial instruments (continued)
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Ahold Annual Report 2012 126
Ahold at a glance
Our strategy
Our performance
Governance
Finandals
Investors
Notes to the consolidated
financial statements
The carrying amount of receivables, cash and cash equivalents, accounts payable, short-term deposits held to maturity, and other current financial assets and liabilities approximate their fair
values because of the short-term nature of these instruments and, for receivables, because of the fact that any recoverability loss is reflected in an impairment loss. The fair values of quoted
borrowings are based on year-end ask-market quoted prices. The fair value of other non-derivative financial assets and liabilities that are not traded in an active market are estimated using
discounted cash flow analyses based on market rates prevailing at year end. The fair value calculation method and the conditions for redemption and conversion of the cumulative preferred
financing shares are disclosed in Note 22. The accrued interest is included in other current financial liabilities (see Note 26) and not in the carrying amounts of non-derivative financial assets
and liabilities.
Derivatives
The fair values, notional amounts, the maturities and the qualification of the derivative financial instruments for accounting purposes are presented in the table below:
December 30, 2012
January 1, 2012
Fair value
Fair value
Notional
amount
million
Maturity
Assets
Liabilities
Notional
amount
Assets
Liabilities
Forward foreign currency contracts1
Within 1 year
2
129
1
140
Cross-currency swap
Within 1 year
1412
407
Cross-currency swap3
After 5 years
(175)
290
(89)
331
Total cash flow hedges
2
(175)
419
142
(89)
878
Forward foreign currency contracts4
Within 1 year
(2)
64
(1)
63
Total net investment hedges
(2)
64
(1)
63
Interest rate swap After 5 years 59 - 3066 57 - 3006
Cross-currency swap5
After 5 years
221
3066
182
3006
Total derivatives - no hedge accounting treatment
280
3066
239
3006
Total derivative financial instruments
282
(177)
789
381
(90)
1,241
1 Foreign currency forwards designated as cash flow hedges are used to hedge the future cash flows denominated in foreign currencies.
2 Cross-currency swap accounted for as cash flow hedges used to hedge currency and cash flow risk on fixed debt denominated in foreign currency related to EUR 600 notes (see Note 21 for additional information), which matured as of March 14,
2012.
3 Cross-currency swap accounted for as cash flow hedges used to hedge currency and cash flow risk on floating debt denominated in foreign currency, related to JPY 33,000 notes (see Note 21 for additional information).
4 Foreign currency forwards accounted for as net investment hedges are used to hedge cash flow currency risk on a dividend flow from ICA.
5 As of December 30, 2012, the valuation of the GBP 250 cross-currency swap, related to the GBP 250 notes (see Note 21 for additional information) includes the impact of the mark-to-market valuation of an embedded credit clause in the amount
of €5 million. The volatility in the financial markets resulted in a €8 million gain related to this credit clause in the year 2012 (€3 million loss in 2011). Ahold is required under these swap contracts to redeem the U.S. dollar notional amount through semi
annual installments that commenced in September 2004. $232 million has been paid down as of December 30, 2012.
6 Interest rate swap and cross-currency interest rale swap relate to the same notional amount of GBP 250 million.
Gains and losses recognized in cash flow hedging reserve in equity as of December 30, 2012, mainly relate to the swap on the JPY 33,000 notes and will be released to the income statement
over a period lasting until 2031
