B Ell
IE3
Notes to the consolidated financial statements
91
9 Net financial expenses
Ahold at a glance 1 Business review 1 Governance 1 Financials 1 Investors
Ahold
Annual Report 2015
millior
2015
2014
Interest income
5
6
Interest expense
(235)
(212)
Net interest expense on defined benefit pension plans
(14)
(16)
Losses on foreign exchange (14) (15)
Fair value gains (losses) on financial instruments
(2)
7
Other
(5)
(5)
Other financial expenses
(21)
(13)
Net financial expenses
(265)
(235)
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 (primarily notes, finance lease liabilities, financing obligations and cumulative preferred financing shares) and interest accretions to provisions.
At the beginning of 2015 and 2014, 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 2015 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 2015, the Company recorded a net exchange loss (including the impact of foreign exchange hedging instruments) of €1 million in operating
income (2014: gain of €2 million).
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.
