Overview
Report of the
Executive Board
Report of the
Supervisory Board
Financial statements
Other information
(iii) Available-for-sale investments
H EINEKEN's investments in equity securities and certain debt securities are classified as available-for-sale. Subsequent to initial recognition, they are
measured at fair value and changes therein - other than impairment losses (see note 3i(i)), and foreign currency differences on available-for-sale
monetary items (see note 3b(i)) -are recognised in other comprehensive income and presented within equity in the fair value reserve. When these
investments are derecognised, the relevant cumulative gain or loss in the fair value reserve is transferred to profit or loss.
Where these investments are interest-bearing, interest calculated using the effective interest method is recognised in the profit or loss. Available-for-sale
investments are recognised or derecognised by El EINEKEN on the date it commits to purchase or sell the investments.
(iv) Investments at fair value through profit or loss
An investment is classified at fair value through profit or loss if it is classified as held for trading or is designated as such upon initial recognition.
Investments are designated at fair value through profit or loss if HEINEKEN manages such investments and makes purchase and sale decisions
based on their fair value in accordance with HEINEKEN's documented risk management or investment strategy. Upon initial recognition, attributable
transaction costs are recognised in profit or loss as incurred.
Investments at fair value through profit or loss are measured at fair value, with changes therein recognised in profit or loss as part of the other net
finance income/(expenses). Investments at fair value through profit and loss are recognised or derecognised by HEINEKEN on the date it commits
to purchase or sell the investments.
(v) Other
Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses. Included in
non-derivative financial instruments are advances to customers. Subsequently, the advances are amortised over the term of the contract as a reduction
of revenue.
(d) Derivative financial instruments (including hedge accounting)
(i) General
HEINEKEN uses derivatives in the ordinary course of business in order to manage market risks. Generally HEINEKEN seeks to apply hedge accounting
in order to minimise the effects of foreign currency, interest rate or commodity price fluctuations in profit or loss.
Derivatives that can be used are interest rate swaps, forward rate agreements, caps and floors, commodity swaps, spot and forward exchange contracts
and options. Transactions are entered into with a limited number of counterparties with strong credit ratings. Foreign currency, interest rate and commodity
hedging operations are governed by internal policies and rules approved and monitored by the Executive Board.
Derivative financial instruments are recognised initially at fair value, with attributable transaction costs recognised in profit or loss as 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
accounting, subsequent measurement is at fair value, and changes therein accounted for as described in 3b(iv), 3d (ii) and 3d(iii).
(ii) Cash flow hedges
Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised in other comprehensive income and
presented in the hedging reserve within equity to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair
value are recognised in profit or loss.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge accounting is
discontinued and the cumulative unrealised gain or loss previously recognised in other comprehensive income and presented in the hedging reserve in
equity, is recognised in profit or loss immediately, or when a hedging instrument is terminated, but the hedged transaction still is expected to occur, the
cumulative gain or loss at that point remains in other comprehensive income and is recognised in accordance with the above-mentioned policy when
the transaction occurs. When the hedged item is a non-financial asset, the amount recognised in other comprehensive income is transferred to the
carrying amount of the asset when it is recognised. In other cases the amount recognised in other comprehensive income is transferred to the same
line of profit or loss in the same period that the hedged item affects profit or loss.
Eleineken N.V. Annual Report 2012
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