77 HEINEKEN N.V. ANNUAL REPORT 2008 Derivatives that can be used are interest rate swaps, forward rate agreements, caps and floors, forward exchange contracts and options. Transactions are entered into with a limited number of counterparties with strong credit ratings. Foreign currency and interest rate hedging operations are governed by an internal policy and rules approved and monitored by the Executive Board. Derivative financial instruments are recognised initially at fair value, with attributable transaction costs recognised in the income statement when incurred. Derivatives for which hedge accounting is not applied are accounted for as instruments at fair value through profit or loss. When derivatives qualify for hedge in accounting, subsequent measurement is at fair value, and changes therein accounted for as described in note 3d(iii), 3f(ii) and (iii). The fair value of interest rate swaps is the estimated amount that Heineken would receive or pay to terminate the swap at the balance sheet date, taking into account current interest rates and the current creditworthiness of the swap counterparties. (ii Cash flow hedges Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are rc cognised directly in equity to the extent that the hedge is effective. To the extent that the hedge is neffective, changes in fair value are recognised in the income statement. If he hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated o exercised, then hedge accounting is discontinued and the cumulative unrealised gain or loss recognised in e uity is recognised in the income statement immediately. When a hedging instrument is terminated, but the h dged transaction still is expected to occur, the cumulative gain or loss at that point remains in equity and is rt zognised in accordance with the above-mentioned policy when the transaction occurs. When the hedged it m is a non-financial asset, the amount recognised in equity is transferred to the carrying amount of the a ;et when it is recognised. In other cases the amount recognised in equity is transferred to the same line o the income statement in the same period that the hedged item affects the income statement. (i Fair value hedges C anges in the fair value of a derivative hedging instrument designated as a fair value hedge are recognised ir the income statement. The hedged item also is stated at fair value in respect of the risk being hedged; the g in or loss attributable to the hedged risk is recognised in the income statement and adjusts the carrying a tount of the hedged item. If he hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a h dged item for which the effective interest method is used is amortised to the income statement over the p riod to maturity. Separable embedded derivatives C anges in the fair value of separable embedded derivatives are recognised immediately in the income s dement. Share capital Ordinary shares C dinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares a recognised as a deduction from equity, net of any tax effects.

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Jaarverslagen | 2008 | | pagina 79