Report of the Supervisory Board To the shareholders The Executive Board has submitted its financial statements for 2003 to the Super visory Board. These financial statements, which can be found on pages 52-84 of this annual report, have been audited by KPMG Accountants N.V., whose report appears on page 86. The Supervisory Board recommends that the shareholders adopt these finan cial statements and, as proposed by the Executive Board, appropriate €157 million of the profit as dividend and add the remainder, amounting to €641 million, to the retained profits. The proposed divi dend amounts to €0.40 per share of €2.00 nominal value, of which €0.16 was paid as interim dividend on 22 September 2003. The dividend for 2002 was €0.40. A proposal to split the shares by issuing five new shares of €1.60 nominal value for every four existing shares of €2.00 nom inal value will be presented to the General Meeting of Shareholders. The new shares will carry full entitlement to dividend as from 1 January 2004. Executive and Supervisory Board changes Messrs. J. Loudon and M.R. de Carvalho retired by rotation from the Supervisory Board at the Annual General Meeting of Shareholders on 24 April 2003. Mr. de Carvalho was eligible for immediate reappointment and was duly reappointed. We thank Mr. Loudon, who chose not to seek reappointment, for his many years of service to the Board. Messrs. H. de Ruiter and A.H.J. Risseeuw are due to retire by rotation from the Supervisory Board at the Annual General Meeting of Shareholders on 29 April 2004. Mr. Risseeuw will be eligible for immediate reappointment, but Mr. De Ruiter will not, having reached the age limit of 70 stipulat ed in the Supervisory Board's by-laws. The Supervisory Board thanks Mr. De Ruiter for his contribution to its work, including his service as Chairman of the Audit Committee. The Supervisory Board proposes to reappoint Mr. Risseeuw and a binding nomination for his appointment will be submitted to the Annual General Meeting on 29 April 2004. After Mr. De Ruiter's departure, the Supervisory Board will have six members. With effect from 30 April 2004, chair manship of the Supervisory Board will pass to Mr. C.J.A. van Lede. At the time of his appointment as a member of the Supervisory Board in 2002, Mr. Dejong agreed to take on the chairmanship to enable Mr. Van Lede, who had been appointed at the same time as Mr. Dejong, to combine his former duties as Chairman and CEO of Akzo Nobel with his member ship of the Supervisory Board. As from 30 April 2004, Mr. Dejong will assume the vice-chairmanship of the Supervisory Board and chairmanship of the Audit Committee. Mr. Van Lede will chair the Preparatory Committee as from the same date. The Supervisory Board proposes to appoint Mr. K. Büche as a member of the Executive Board with effect from 1 May 2004. A binding nomination for his appointment will be submitted to the Annual General Meeting of Shareholders on 29 April 2004. Corporate Governance The Dutch Corporate Governance Code was discussed at length in 2003 (in its draft form) and early in 2004 (in its final form). At the meeting on 24 February 2004, the Supervisory Board discussed the final Code and its underlying principles in relation to the structure of the Heineken group. The timetable for dealing with the various issues was also discussed. While the company endorses the code's princi ples, the structure of the Eleineken group, and in particular the relationship between Heineken Holding N.V. and Heineken N.V., prevents Heineken N.V. from complying with a small number of the best-practice provisions. This is explained in greater detail in the chapter on the Dutch Corporate Governance Code on page 9 of this report. Consultation and decision-making The Supervisory Board held seven joint meetings with the Executive Board in 2003. The agenda of these meetings included a number of regular items, such as consideration of the company's strategy, financial position and results, the operating companies' policies and business plans, acquisitions and other investment proposals and management development. Other items on the agenda included evaluation of completed investment projects, interest-rate and exchange-rate risks, financing, pensions and internal risk management and control systems. Meetings convened to consider the year's results were attended by the external auditors. Particular attention was devoted in 2003 to the new International Financial Reporting Standards. An extra meeting was convened to approve the acquisition of BBAG (Austria). One meeting was held at the brewery in 's-Hertogenbosch, where new developments within the brewery and product innovations were discussed. A meeting was also held in Strasbourg, where the Heineken France management team gave a presentation for the Supervisory Board on developments in France. At two of the meetings, the Executive Board withdrew while the Supervisory Board discussed the functioning and composition of the Executive and Supervisory Boards. Committees The Supervisory Board has two com mittees, the Audit Committee and Preparatory Committee. Six meetings were held last year by the Preparatory Committee, which is responsible HEINEKEN N.V. ANNUAL REPORT 2003

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