128 FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
HEINEKEN N.V. ANNUAL REPORT 20G i
30. Financial risk management and financial instruments
Fair value sensitivity analysis for fixed rate instruments
During 2008, Heineken opted to apply fair value hedge accounting on certain fixed rate financial liabilities.
The fair value movements on these instruments are recognised in the income statement. The change in fair
value on these instruments was €294 million in 2008, which was offset by the change in fair value of the
hedging instruments, which was -€288 million.
A change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity
and profit or loss by the amounts shown below (before tax).
Profit or loss Equity
100 bp
100 bp
100 bp
100 bp
In millions of EUR
increase
decrease
increase
decrease
31 December 2008
Instruments designated at fair value
40
44
40
44
Interest rate swaps
(4)
(84)
126
(214)
Fair value sensitivity (net)
36
(40)
166
(170)
31 December 2007
Instruments designated at fair value
Interest rate swaps
Fair value sensitivity (net)
As part of the acquisition ofS&N, Heineken took over a specific portfolio of euro floating-to-fixed interest rate
swaps with a notional amount of €1,290 million. Although interest rate risk is hedged economically, it is not
possible to apply hedge accounting on this portfolio. A movement in interest rates will therefore lead to a fair
value movement in the income statement under the other net financing income/expenses. Any related non
cash income or expenses in our income statement are expected to reverse over time.
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates constantly applied during the reporting period would have
increased (decreased) equity and profit or loss by the amounts shown below (after tax). This analysis assumes
that all other variables, in particular foreign currency rates, remain constant. The analysis is performed on the
same basis for 2007.
Profit or loss Equity
100 bp
100 bp
100 bp
100 bp
In millions of EUR
increase
decrease
increase
decrease
31 December 2008
Variable rate instruments
(42)
42
(42)
42
Net interest rate swaps floating to fixed
35
(35)
35
(35)
Cash flow sensitivity (net)
(7)
7
(7)
7
31 December 2007
Variable rate instruments
(1)
1
(1)
1
Interest rate swaps fixed to floating
Cash flow sensitivity (net)
(1)
1
(1)
1
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 advisers in this regard.
