I Financial Statements 01
Notes to the consolidated financial statements
3 Significant accounting policies
differences arising on the retranslation of available-for-sale (equity) investments. Non-monetary assets
and liabilities denominated in foreign currencies that are measured at cost remain translated into the
functional currency at historical exchange rates.
(ii) Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising
on consolidation, are translated to Euro at exchange rates at the balance sheet date. The revenue and
expenses of foreign operations are translated to Euro at exchange rates approximating the exchange
rates ruling at the dates of the transactions.
Foreign currency differences are recognised directly in equity as a separate component. Since 1
January 2004, the date of transition to IFRS, such differences have been recognised in the translation
reserve. The cumulative currency differences at the date of transition to IFRS were deemed to be
zero. When a foreign operation is disposed of, in part or in full, the relevant amount in the translation
reserve is transferred to the income statement.
The following exchange rates, for most important countries in which Fleineken has operations, were
used while preparing these financial statements:
Year end Average
In EUR2006200520062005
CLP 0.001423 0.001651 0.001502 0.001442
EGP 0.133333 0.148588 0.138910 0.139265
NGN 0.005910 0.006464 0.006217 0.006137
PLN 0.261097 0.259081 0.256988 0.248562
RUB 0.028825 0.029416 0.029323 0.028442
SGD 0.495050 0.510204 0.501968 0.483394
USD 0.758380 0.845380 0.797258 0.804366
(c) Non-derivative financial instruments
(i) General
Non-derivative financial instruments comprise investments in equity and debt securities, trade and
other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.
Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at
fair value through profit or loss, any directly attributable transaction costs, except as described below.
Subsequent to initial recognition non-derivative financial instruments are measured as described
below.
A financial instrument is recognised if Heineken becomes a party to the contractual provisions of the
instrument. Financial assets are derecognised if Heineken's contractual rights to the cash flows from
the financial assets expire or if Fleineken transfers the financial asset to another party without retaining
control or substantially all risks and rewards of the asset. Regular way purchases and sales of financial
assets are accounted for at trade date, i.e., the date that Fleineken commits itself to purchase or sell
the asset. Financial liabilities are derecognised if Fleineken's obligations specified in the contract expire
or are discharged or cancelled.
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are
repayable on demand and form an integral part of Fleineken's cash management are included
as a component of cash and cash equivalents for the purpose of the statement of cash flows.
Accounting for interest income and expenses and net finance expenses is discussed in note 3(o).
"7/1 Heineken N.V.
I *r Annual Report 2006
