Beer glasses should be used for beer only Risk Management and Control System (continued) Financial risks Regulatory risks Using beer glasses for other beverages, like fruit juice or milk, will leave substances behind, such as grease. This will cause the beer to go flat. A good beer needs the cleanest glass possible. 48 Report of the Executive Board Currency risk Heineken operates internationally and reports in euros, which has proven to be a very strong currency over the past few years. Currency fluctuations, relating to the US dollar, South African rand, Polish zloty and, to a lesser extent, the British pound could materially affect overall Company results, considering the size of exports from the eurozone to mainly the USA and South Africa. Heineken has a clear policy on hedging transactional exchange risks, which postpones the impact on financial results. Translation exchange risks are hedged to a limited extent. In 2009, operating results of Operating Companies in countries with currencies that devaluated versus the euro are translated into euro at lower rates. Since the Group attracts funding and pays interest in these currencies as well, the impact of devaluations of such currencies like the Russian rouble, British pound and Polish zloty on our results is mitigated to a certain extent. In addition, Heineken strengthened its risk management regarding the monitoring and managing of currency and interest positions. Capital availability The Company has a strong focus on cash generation to reduce its debt levels and to improve its financing ratios. The Company has a clear focus on ensuring sufficient access to capital markets to refinance maturing debt obligations and to finance long-term growth. The Company aims to further fine-tune the maturity profile of its long-term debts. Financing strategies are under continuous evaluation. Terms and conditions of additional refinancing may be impacted by the changing credit market conditions. Strong cost and cash management and strong controls over investment proposals are in place to ensure effective and efficient allocation of financial resources. Pension In some of the countries where it operates, Heineken makes contributions to a number of defined benefit plans that provide pension benefits for employees upon retirement (mainly the UK and the Netherlands as per disclosure in financial statements). The contractual and regulatory arrangements with these pension funds are such that in case of shortfalls, no one-off payments are required but the annual cash contributions would increase, thereby mitigating the potential cash outflow over a longer period of time. Tax Heineken and its Operating Companies are subject to a variety of local excise and other tax regulations. Group Fiscal Affairs has further progressed in structuring tax risk management through the roll-out of a Tax Control Frameworl Beer excise duties could have a strong impact on the financial results. In principle, Heineken's sales prices are adjusted to reflect changes in the rate of excise duty, but increased rates may have a negative impact on sales volume, respectively the coverage of fixed costs. Litigation Due to increasing legislation there is an increased possibility of non-compliance. Additionally, more supervision by regulators and the growing claim culture may potentially increase the impact of non-compliance, both financially and on the reputation of the Company. Each half year, all majority-owned companies formally report outstanding claims and litigations against the Company in excess of EUR1 million to Group Legal Affairs, including an assessment of the amounts to be provided for. There may be current risks that do not have a significant impact on the business but which could -at a later stage - develop into a material impact on the Company's business. The Company's risk management systems are focused on timely discovery of such risks. Did you know: Annual Report 2009 - Heineken N.V.

Jaarverslagen en Personeelsbladen Heineken

Jaarverslagen | 2009 | | pagina 45