Notes to the Consolidated Balance Sheet, Statement of Income
and Statement of Cash Flows for the financial year 1997
General
The annual accounts and annual report are subject
to Title 9, Book 2 of the Netherlands Civil Code.
Several changes took place in the consolidation
during the financial year. The most important
changes in regard to the annual accounts were as
follows: Birra Moretti in Italy, which was consolidated
as ofjuly 1,1996, has now been included for a full
financial year. Effective January 1,1997 Kumasi
Brewery, Ghana (50.3%) was fully consolidated and
Brasseries du Logone, Chad (50%) was
proportionally consolidated for 50%. Furthermore,
interests were expanded in several beverage whole
salers. These changes resulted in an increase in net
turnover ofNLG363milllionandina goodwill
charge of NLC131 million to Group equity.
The financial data of Heineken N.V. are
incorporated in the consolidated balance sheet and
statement of income. Consequently, a simplified
presentation has been effected for the profit and
loss account of Heineken N.V., as enabled under the
provisions of Article 402, Title 9, Book 2 of the
Netherlands Civil Code.
The amounts stated in the notes are in thousands
of guilders, unless indicated otherwise.
Basis of consolidation
In the consolidated balance sheet and statement of
income Heineken N.V. and its subsidiaries, with
which Heineken N.V. constitutes a group, are shown
as fully consolidated. The minority interests in the
Group funds and in the Group profit are indicated
separately. Proportional consolidation takes place
in the case of participations in which the Heineken
Group has a direct interest and, in co-operation with
other shareholders, exercises control with regard
to management policy ifthe activities of the
participations concerned are closely linked with
those of the Heineken Group.Under the heading
"Changes in the consolidation" the following
statements of the movements of various assets
and liabilities show the movements which relate
to the increase in or reduction of our interests in
consolidated participations.
Translation offoreign currencies
Amounts in foreign currency have been translated
at the rates of exchange on the balance sheet date or
at the EMS central rates where a narrow band is
applicable within the EMS to the currency of the rele
vant countries. Hedging transactions are concluded
exclusively for the limitation of trading risks on
receivables and debts and on cash flows in foreign
currencies which are very likely to recur on a regular
basis. Forward transactions and options are used
to this end. Before hedging, the incoming and
outgoing cash flows in given currencies are offset
centrally as far as possible. Where forward exchange
transactions are concluded to hedge positions in
foreign currency, those positions are translated at
the rate of exchange at which they were hedged.
The recognition of gains and losses arising from the
translation of transactions entered into for the pur
pose of hedging future cash flows is deferred until
the time when the relevant cash flows are accounted
for. Commercial transactions denominated in
foreign currencies are booked at the valid spot rates
or forward rates where forward contracts are closed
in regard to these transactions.
Differences in value arise as a result of the
translation into guilders of the shareholders' equity
at the beginning of the financial year of the foreign
consolidated participations and of the financing
furnished to these participations within the Group
framework. These differences are regarded as a
revaluation and are credited or debited to the
Group funds, taking into account the possible
levying of taxation. Other differences connected
with changes in rates of exchange and EMS central
rates are incorporated in the statement of income.
