Notes to the consolidated financial statements
9 Net financial expenses
Ahold at a glance
Annual Report 2014
Net interest expense on defined benefit pension plans
Losses on foreign exchange
Fair value gains (losses) on financial instruments
Other financial expenses
Net financial expenses
Interest income mainly relates to interest earned on cash and cash equivalents and short-term cash deposits and similar instruments.
Interest expense primarily relates to financial liabilities measured at amortized cost (mainly loans, finance lease liabilities, financing obligations and cumulative preferred financing shares) and interest accretions to provisions.
At year end 2014 as well as 2013, substantially all pension plans were in a liability position. Consequently, during both years, the net interest component of pension expense resulted in interest expense.
Foreign exchange results on financial assets and liabilities are presented as part of net financial expenses, within losses on foreign exchange. The losses on foreign exchange in 2014 mainly resulted from the foreign exchange
translation of the remaining GBP 250 million of the original GBP 500 million notes. 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 2014, the Company recorded a net exchange loss (including impact of foreign exchange hedging instruments) of €2 million in operating
income (2013: loss of €1 million).
In 2014 fair value gains (losses) on financial instruments primarily resulted from the derivatives related to the remaining GBP 250 million notes (an interest rate and a U.S. dollar cross-currency swap), which do not qualify for
hedge accounting treatment.
For more information on financial instruments, see Note 30.
"Other" included in "Other financial expenses" in 2013 primarily comprised of €11 million relating to the change in discount rate used for a multi-employer pension plan withdrawal liability.