32. Financial risk management and financial instruments
138 Annual Report 2009 - Heineken N.V.
Financial Statements
Notes to the consolidated financial statements
Interest rate risk
In managing interest rate risk, Heineken aims to reduce the impact of short-term fluctuations on earnings. Over
the longer term, however, permanent changes in interest rates would have an impact on profit.
Heineken opts for a mix of fixed and variable interest rates in its financing operations, combined with the use of
interest rate instruments. Currently Heineken's interest rate position is more weighted towards fixed rather than
floating. Interest rate instruments that can be used are interest rate swaps, forward rate agreements, caps and
floors.
Swap maturity follows the maturity of the related loans and borrowings and have swap rates for the fixed leg
ranging from 2.0 to 7.3 per cent (2008: from 2.9 to 7.3 per cent).
Interest rate risk - Profile
At the reporting date the interest rate profile of Heineken's interest-bearing financial instruments was as follows:
In millions of EUR2009 2008
Fixed rate instruments
Financial assets
157
121
Financial liabilities
(4,664)
(3,192)
Interest rate swaps floating to fixed
(2,505)
(4,656)
CM
O
r£
(7,727)
Variable rate instruments
Financial assets
88
817
Financial liabilities
(2,947)
(6,452)
Interest rate swaps fixed to floating
2,505
4,656
(354)(979)
Fair value sensitivity analysis for fixed rate instruments
During 2009, 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 EUR 73 million in 2009 (2008: EUR 294 million), which was offset by the change in fair
value of the hedge accounting instruments, which was EUR(73) million (2008: EUR(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 (after tax).
Profit or loss Equity
100 bp too bp too bp too bp
In millions of EUR increase decrease increase decrease
31 December 2009
Instruments designated at fair value
45
(48)
45
(48)
Interest rate swaps
(19)
21
49
(47)
Fair value sensitivity (net)
26
(27)
94
(95)
31 December 2008
Instruments designated at fair value
30
33
30
33
Interest rate swaps
(3)
(63)
94
(159)
Fair value sensitivity (net)
27
(30)
124
(126)
