2003 2002
Notes to the Consolidated Balance Sheet
Off-balance-sheet commitments
Tenancy and operating leases 98 48
Capital expenditure commitments, unless already
included in tangible fixed assets 60 53
Long-term raw material purchase contracts 155 176
Declarations of joint and several liability 519 398
Other off-balance-sheet commitments 56 29
Commitment to acquire the remaining
GeBAG shares 112 -
Loan to Stichting Heineken Pensioenfonds - 150
The commitment to acquire the remaining Getranke-
Beteiligungs-Aktiengesellschaft ('GeBAG') shares is per-
suant to the agreement of 6 June 2003 between Heineken
and (the trustee of) shareholders of GeBAG.
Financial instruments
Financial instruments, accounted for as assets and
liabilities in the balance sheet, are used in the normal
course of business and use is also made of financial
derivatives. The financial instruments included in the
balance sheet are made up almost entirely of financial
fixed assets, trade debtors, other amounts receivable,
cash, long-term borrowings and current liabilities.
Heineken is exposed to interest rate, exchange rate and
credit risks on these financial instruments. To limit the
risks, use is made of interest rate derivatives, such as
interest rate swaps, forward rate agreements, caps and
floors, to minimise the effects of interest rate
fluctuations on results. In addition, forward exchange
contracts are used to limit the effects of exchange rate
movements on results.
Hedging policy
Exchange rate and interest rate hedging operations are
governed by a precisely defined policy and strict rules.
Because of the historically low interest rates in 2003,
Heineken opted to fix the interest rates on a large
proportion of the contracted loans. Heineken is also
exposed to translation and transaction risks. Translation
risks are limited to a certain extent by financing in local
currencies. Transaction risks arise mainly on cash flows
in foreign currencies generated by export activities.
The most important foreign currency cash flow is in US
dollars. After deduction of dollar-denominated costs,
a net cash flow in US dollars remains. This cash flow
is hedged well in advance by means of a combination
of forward contracts and options. This policy reduces
the volatility of export results due to short-term
fluctuations in the value of the US dollar against the
euro. Transactions are entered into with a limited
number of counterparties with excellent credit ratings.
The activities are closely monitored, independently
of implementation.
HEINEKEN N.V. ANNUAL REPORT 2003
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