Notes to the consolidated financial statements
116 Financial statements
30. Financial risk management and financial instruments
The movement in the allowance for impairment in respect of trade and other receivables during the year
was as follows:
In millions of EUR 2007 2006
Balance as at 1 January
208 215
Impairment loss recognised
49 39
Allowance used
(12) (10)
Allowance released
(30) (36)
Effect of movements in exchange rates
(7)
Balance as at 31 December
208 208
The movement in the allowance for impairment in respect of held-to-maturity investments during the
year was as follows:
In millions of EUR
2007 2006
Balance as at 1 January
90
Changes in consolidation
2
Impairment loss recognised
38 37
Allowance used
(19) (2)
Balance as at 31 December
109 90
Impairment losses recognised for trade and other receivables and held-to-maturity investments are part
of the other non-cash items in the consolidated statement of cash flows.
The impairment loss of €38 million in respect of held-to-maturity investments and the impairment loss of
€49 million in respect of trade receivables were included in expenses for raw materials, consumables
and services.
An impairment loss of €38 million in respect of held-to-maturity investments was recognised during the
current year of which €25 million related to loans to customers. Heineken has no collateral in respect of
these impaired investments.
The allowance accounts in respect of trade and other receivables and held-to-maturity investments are
used to record impairment losses, unless Heineken is satisfied that no recovery of the amount owing is
possible, at that point the amount considered irrecoverable is written off against the financial asset.
Liquidity risk
Liquidity risk is the risk that Heineken will not be able to meet its financial obligations as they fall due.
Heineken's approach to managing liquidity is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to Heineken's reputation.
Strong cash flow generation and sufficient access to capital is ensured to finance long-term growth and
to keep pace with the consolidation of the global beer market. Financing strategies are under continuous
evaluation. Strong cost and cash management and controls over investment proposals are in place to
ensure effective and efficient allocation of financial resources. In addition, the Heineken N.V. €2 billion
Revolving Credit Facility 2005-2012 was not utilised as at 31 December 2007 (31 December 2006:
not utilised).
Heineken N.V. Annual Report 2007