119
Exposure to foreign currency risk
Heineken's exposure for the USD was as follows based on notional amounts:
2007
In millions USD USD
oans and held-to-maturity investments 74
Trade and other receivables 198
Cash and cash equivalents 5
Secured bank loans - (35)
I ank overdrafts - (3)
de and other payables (8)(16)
Gross balance sheet exposure 269 233
timated forecast sales next year 1,051 1,147
Estimated forecast purchases next year(163) (201)
Gross exposure 1,157 1,179
Cash flow hedging forward exchange contracts (890) (978)
Other hedging forward exchange contracts(161) (178)
Net exposure10623
Included in the USD amounts are intra-Heineken cash flows.
The loans represent intra-Heineken financing.
The following significant exchange rates applied during the year:
Reporting date
Average rate mid-spot rate
Ir EUR 2007 2006 2007 2006
0.7308 0.7973 0.6793 0.7584
Sensitivity analysis
A 10 per cent strengthening of the euro against the US Dollar as at 31 December would have increased
ecreased) equity and profit by the amounts shown below. This analysis assumes that all other variables,
in particular interest rates, remain constant. The analysis is performed on the same basis for 2006.
Equity Profit or loss
It millions Of EUR 2007 2006 2007 200E
LSD 41 50 (6) (3)
A 10 per cent weakening of the euro against the US Dollar as at 31 December would have had the equal
but opposite effect on the basis that all other variables remain constant.
I iterest rate risk
managing interest rate risk, Heineken aims to reduce the impact of short-term fluctuations on
earnings. Over the longer term, however, permanent changes in interest rates would have an impact
on profit.
L eineken opts for a well-balanced mix of fixed and variable interest rates in its financing operations,
combined with the use of interest rate instruments. Currently, Heineken's interest rate position is
predominantly fixed rather than floating. Interest rate instruments that can be used are interest rate
swaps, forward rate agreements, caps and floors.
Swap maturity follows the maturity of the related loans and borrowings and have swap rates ranging
om 5.0 to 5.5 per cent (2006: from 3.4 to 5.5 per cent).
Heineken N.V. Annual Report 2007