2003
94 Heineken N.V. Annual Report 2004 Financial Statements 2004 Notes to the Consolidated Balance Sheet
2004
Off-balance-sheet commitments
Tenancy and operating leases
Capital expenditure commitments, unless already
115
98
included in tangible fixed assets
Long-term raw material purchase contracts
Declarations of joint and several liability
Other off-balance-sheet commitments
Commitment to acquire the remaining
739
137
119
161
519
155
60
56
GeBAG shares
112
Heineken is involved in various lawsuits and claims
in connection with ordinary activities. Despite the fact
that the outcome of the various proceedings cannot
be stated with any certainty, the management believes
that any adverse results will not have any material
effect on the financial position and profits.
Financial instruments
Financial instruments, accounted for as assets and liabilities in the balance sheet, are used in the nor
mal course of business and use is also made of financial derivatives. The financial instruments included
in the balance sheet are made up of financial fixed assets, trade debtors, other amounts receivable,
cash, long-term borrowings and current liabilities. Fleineken is exposed to interest rate, exchange rate
and credit risks on these financial instruments. To limit the risks, use is made of interest rate deriva
tives, such as interest rate swaps, forward rate agreements, caps and floors, minimising 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. 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.
