50
FINANCIAL REVIEW CONTINUED
1,080
REPORT OF THE EXECUTIVE BOARD
HEINEKEN N.V. ANNUAL REPORT 20C8
Results (beia)
In millions of EUR20082007
Amortisation of brands and customer relationships 63 11
Exceptional items789319
EBIT (beia) 1,9321J48
In millions of EUR 2008 2007
Net profit
209
807
Amortisation of brands and customer relationships
47
11
Exceptional items
757
301
Net profit (beia)
1,013
1,119
EBIT (beia) and Net profit (beia)
In millions of EUR
EBIT beia
Net profit beia
2007
1,748
1,119
Organic growth
153
121
Changes in consolidation
71
(198)
Effects of movements in exchange rates
(40)
(29)
2008
1,932
1,013
EBIT and net profit
In 2008, EBIT amounted to €1,080 million compared to €1,418 million in 2007, heavily impacted by an
increase in exceptional items of €470 million compared to 2007.
In 2008, €789 million was recognised at EBIT level relating to:
Impairment of goodwill Russia €275 million
Impairment investments in India €200 million
Impairment Pub portfolios in the UK €51 million
Restructuring costs €79 million
Losses on disposals and write-offs related to restructurings €46 million
Acquisition, integration and restructuring costs related to S&N acquisition €138 million
EBIT as a proportion of revenue decreased to 7.5 per cent in 2008 from 12.6 per cent in 2007, mainly due to
above-mentioned exceptional items.
Net interest expenses increased from €91 million to €378 million mainly due to higher consolidated net debt
resulting from the acquisition of S&N and other acquisitions. On an organic basis the net interest was slightly
higher (€5 million) than in 2007. This was mainly attributable to higher interest rates in emerging markets as
compared to 2007. Other net financing expenses increased substantially to €107 million. Of this, an amount
of €65 million was attributable to negative fair value movements on a portfolio of interest rate swaps at S&N,
which are treated as an exceptional item. Although interest rate risk is hedged economically, it is not possible
to apply hedge accounting on this specific portfolio of Euro floating-to-fixed interest rate swaps with a
notional amount of €1,290 million. The downward movement in interest rates during the fourth quarter led
to a negative fair value movement. The related non-cash expenses in our income statement are expected to
reverse over time. Furthermore, other net financing expenses include a net amount of €9 million associated
with the revaluation of derivatives related to EUR/GBP hedging for the acquisition of S&N and the EUR/CHF
hedging for the acquisition of Eichhof, which are also treated as exceptional items.
