2007
Carrying
Contractual
6 months
More than
In millions of EUR
amount
cash flows
or less 6-12 months
1-2 years
2-5 years
5 years
Financial liabilities
Secured bank loans
28
(30)
(5)
(5)
(9)
(9)
(2)
Unsecured bank loans
394
(407)
(183)
(63)
(35)
(120)
(6)
Unsecured bond issues
1,317
(1,566)
(22)
(243)
(52)
(612)
(637)
Finance lease liabilities
7
(7)
(1)
(1)
(1)
(2)
(2)
Non-interest-bearing liabilities
13
(13)
(10)
(2)
(1)
Deposits from third parties
323
(325)
(324)
(1)
Sank overdrafts
251
(251)
(251)
Trade and other payables,
excluding interest and dividend
2,456
(2,428)
(2,354)
(74)
Derivative financial (assets) and liabilities
orward exchange contracts used
for hedging:
Outflow
36
(1,492)
(707)
(586)
(199)
Inflow
(104)
1,560
738
613
209
4,721
(4,959)
(3,109)
(360)
(97)
(745)
(648)
rhe total carrying amount and contractual cash flows of derivatives are included in trade and other
eceivables (note 20) and trade and other payables (note 29) and non-current non-interest bearing liabilities
note 24).
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity
irices will affect Heineken's income or the value of its holdings of financial instruments. The objective of
narket risk management is to manage and control market risk exposures within acceptable parameters,
vhilst optimising the return on risk.
Heineken uses derivatives in the ordinary course of business, and also incurs financial liabilities, in order to
nanage market risks. Generally, Heineken seeks to apply hedge accounting in order to minimise the effects
)f foreign currency fluctuations in the income statement.
)erivatives that can be used are interest rate swaps, forward rate agreements, caps and floors, forward
txchange contracts and options. Transactions are entered into with a limited number of counterparties
vith strong credit ratings. Foreign currency and interest rate hedging operations are governed by an internal
jolicy and rules approved and monitored by the Executive Board.
oreign currency risk
leineken is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in a
turrency other than the respective functional currencies of Heineken entities. The main currencies that give
ise to this risk are the US Dollar and British Pound.
n managing foreign currency risk, Heineken aims to reduce the impact of short-term fluctuations on
?arnings. Over the longer term, however, permanent changes in foreign exchange rates would have an
mpact on profit.
Heineken hedges up to 90 per cent of its mainly intra-Heineken US Dollar cash flows on the basis of rolling
:ash flow forecasts in respect of forecasted sales and purchases. Cash flows in other foreign currencies
are also hedged on the basis of rolling cash flow forecasts. Heineken mainly uses forward exchange
:ontracts to hedge its foreign currency risk. Given the limited availability of efficient and effective hedging
nstruments hedging levels are temporarily below policy in a number of Central and Eastern European
:ountries. The majority of the forward exchange contracts have maturities of less than one year after
he balance sheet date.