121
Other market price risk
Management of Heineken monitors the mix of debt and equity securities in its investment portfolio based
on market expectations. Material investments within the portfolio are managed on an individual basis.
The primary goal of Heineken's investment strategy is to maximise investment returns in order to
partially meet its unfunded defined benefit obligations management is assisted by external advisors
in this regard.
Commodity risk is the risk that changes in commodity price will affect Heineken's income. The objective
of commodity risk management is to manage and control commodity risk exposures within acceptable
parameters, whilst optimising the return on risk. So far, commodity trading by the Company is limited to
the sale of surplus C02 emission rights. Heineken does not enter into commodity contracts other than
to meet Heineken's expected usage and sale requirements.
Cash flow hedges
The following table indicates the periods in which the cash flows associated with derivatives that are
cash flow hedges are expected to occur.
2007
In millions of EUR
Carrying
amount
Expected
cash
flows
6
months
or less
6-12
months
1-2
years
2-5
years
More
than 5
years
Interest rate swaps used
for hedging, net liabilities
Forward exchange contracts:
Assets
(104)
1,560
738
613
209
-
-
Liabilities
36
(1,492)
(707)
(586)
(199)
-
-
(68)
68
31
27
10
-
-
2006
in millions of EUR
Carrying
amount
Expected
cash
flows
6
months
or less
6-12
months
1-2
years
2-5
years
More
than 5
years
nterest rate swaps used
or hedging, net liabilities
12
(12)
(1)
(11)
orward exchange contracts:
Assets
(43)
1,154
531
350
273
iabilities
2
(1,121)
(514)
(338)
(269)
(29)
21
17
12
3
(11)
-
he periods in which the cash flows associated with derivatives that are cash flow hedges are expected
o impact the income statement is on average two months earlier than the occurrence of the cash flows
as in above table.
apital management
There were no major changes in Heineken's approach to capital management during the year. The
xecutive Board's policy is to maintain a strong capital base so as to maintain investor, creditor and
market confidence and to sustain future development of business and acquisitions. Capital is herein
defined as equity attributable to equity holders of the Company (total equity minus minority interests).
leineken is not subject to externally imposed capital requirements other then the legal reserves
explained in note 22. Shares are purchased to meet the requirements under the Long-Term Incentive
Plan as further explained in note 27. As approved in the Annual General Meeting of Shareholders in
April 2007, Heineken renewed its dividend policy as further explained in note 22.
Heineken N.V. Annual Report 2007
