Notes to the consolidated financial statements
72 Financial statements
3. Significant accounting policies
(b) Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Heineken
entities at the exchange rates at the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are retranslated to the functional currency
at the exchange rate at that date. The foreign currency gain or loss arising on monetary items is the
difference between amortised cost in the functional currency at the beginning of the period, adjusted
for effective interest and payments during the period, and the amortised cost in foreign currency
translated at the exchange rate at the end of the period.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value
are retranslated to the functional currency at the exchange rate at the date that the fair value was
determined. Foreign currency differences arising on retranslation are recognised in the income
statement, except for differences arising on the retranslation of available-for-sale (equity) investments
and foreign currency differences arising on the retranslation of a financial liability designated as a hedge
of a net investment. 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. Foreign exchange gains and losses arising from a monetary item
receivable from or payable to a foreign operation, the settlement of which is neither planned nor likely
in the foreseeable future, are considered to form part of a net investment in a foreign operation and are
recognised directly in equity in the translation reserve.
The following exchange rates, for most important countries in which Heineken has operations, were used
whilst preparing these financial statements:
Year-end
Average
In EUR
2007 2006
2007 2006
CLP
EGP
NGN
PLN
RUB
SGD
USD
ZAR
0.0014 0.0014
0.1238 0.1333
0.0058 0.0059
0.2783 0.2611
0.0278 0.0288
0.4725 0.4951
0.6793 0.7584
0.0997 0.1087
0.0014 0.0015
0.1294 0.1389
0.0058 0.0062
0.2645 0.2570
0.0286 0.0293
0.4850 0.5020
0.7308 0.7973
0.1036 0.1188
Heineken N.V. Annual Report 2007
