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(iii) Hedge of net investment in foreign operation
Foreign currency differences arising on the retranslation of a financial liability designated as a hedge
of a net investment in a foreign operation are recognised directly in equity, in the translation reserve,
to the extent that the hedge is effective. To the extent that the hedge is ineffective, such differences
are recognised in profit or loss. When the hedged part of a net investment is disposed of, the associated
cumulative amount in equity is transferred to profit or loss as an adjustment to the profit or loss
on disposal.
(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. Subsequent to initial recognition
non-derivative financial instruments are measured as described below.
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable
on demand and form an integral part of Heineken'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, interest expenses and other net finance income and expenses are
discussed in note 3r.
Held-to-maturity investments
If Heineken has the positive intent and ability to hold debt securities to maturity, they are classified as
held-to-maturity. Debt securities are loans and long-term receivables and are measured at amortised
cost using the effective interest method, less any impairment losses. Investments held-to-maturity are
recognised or derecognised on the day they are transferred to or by Heineken. Held-to-maturity
investments includes loans to customers of Heineken.
Available-for-sale investments
Heineken's investments in equity securities and certain debt securities are classified as available-for-sale.
Subsequent to initial recognition, they are measured at fair value and changes therein, except for
impairment losses (see note 3i(i)), and foreign exchange gains and losses on available-for-sale monetary
items (see note 3b(i)), are recognised directly in equity. When these investments are derecognised, the
cumulative gain or loss previously recognised directly in equity is recognised in the income statement.
V here these investments are interest-bearing, interest calculated using the effective interest method is
r cognised in the income statement. Available-for-sale investments are recognised or derecognised by
Heineken on the date it commits to purchase or sell the investments.
Investments at fair value through profit or loss
A i investment is classified as at fair value through profit or loss if it is held for trading or is designated
a such upon initial recognition. Investments are designated at fair value through profit or loss if
Heineken manages such investments and makes purchase and sale decisions based on their fair value
accordance with Heineken's documented risk management or investment strategy. Upon initial
cognition, attributable transaction costs are recognised in the income statement when incurred.
Investments at fair value through profit or loss are measured at fair value, with changes therein
recognised in the income statement. Investments at fair value through profit and loss are recognised
o derecognised by Heineken on the date it commits to purchase or sell the investments.
Heineken N.V. Annual Report 2007
